1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

How Important is Wealth for Explaining Household Consumption Over the Recent Crisis?

An Empirical Study for the United States, Japan and the Euro Area

This paper provides new empirical results linking financial and housing wealth to household consumption for the United States, Japan and the euro area. The results suggest that there are important cross-country differences in how wealth, especially housing wealth, affects consumption. They further demonstrate that it can be important to take into account wealth effects on consumption in short-term forecasting exercises, a point which is particularly well illustrated in relation to the recent economic crisis. In addition, conditional projections underline the importance of asset price developments and wealth in determining US savings over the medium term.

English

Keywords: housing wealth
JEL: C22: Mathematical and Quantitative Methods / Single Equation Models; Single Variables / Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; D12: Microeconomics / Household Behavior and Family Economics / Consumer Economics: Empirical Analysis; E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Macroeconomics: Consumption; Saving; Wealth; E44: Macroeconomics and Monetary Economics / Money and Interest Rates / Financial Markets and the Macroeconomy
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