L'effet de la richesse sur la consommation aux États-UnisYanick Desnoyers Staff Working Papers from Bank of Canada Abstract: The substantial growth in wealth over the course of the second half of the 1990s generated the equivalent of a certain level of savings, while simultaneously causing household savings rates to fall significantly. The author seeks to explain this decline in savings, observed since 1995, using the methodology developed by King, Plosser, Stock, and Watson (1991). In contrast to the results obtained in a number of other studies, those presented here demonstrate that the wealth effect on consumption is transitional rather than permanent, dissipating quite rapidly. The methodology allows the author to account for the endogeneity of the model's variables, while also identifying the reaction of consumption to permanent shocks to income, stock wealth, and housing wealth. It further allows the author to compute the marginal propensity of households to consume from stock wealth, which turns out to be about 5.8 per cent. Consequently, about half of the fall in the savings rate observed since 1995 can be explained by the significant increase in stock wealth during this period. The other half is attributable to the increase in housing wealth and in the marginal propensity to consume from income. Keywords: Domestic; demand; and; components (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:01-14 Access Statistics for this paper More papers in Staff Working Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC. |
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