Open Access. Powered by Scholars. Published by Universities.®
Social and Behavioral Sciences Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 2 of 2
Full-Text Articles in Social and Behavioral Sciences
Wealth Effects On Consumer Spending In The Us Economy, Andriy Avramenko
Wealth Effects On Consumer Spending In The Us Economy, Andriy Avramenko
Honors Theses
This paper investigates the effects of wealth on consumer spending in the United States. A traditional life-cycle model is estimated first. Although it does find a statistically significant wealth effect, its findings are unusable due to the presence of autocorrelation and non-stationarity. Variables in logarithmic forms are found to be cointegrated. Thus, a logarithmic model with the Stock-Watson adjustment and an AR(I) term is estimated instead. Three extensions to this model are offered. First, wealth is divided into stock market and non-stock market components, second into liquid and illiquid components. Finally, a new approach to the wealth division is introduced, …
Asymmetric Wealth Effect : American Consumption And The Stock Market, Jonathan Greene
Asymmetric Wealth Effect : American Consumption And The Stock Market, Jonathan Greene
Honors Theses
Conventional estimates of the marginal propensity to consume (MPC) out of changes in net worth average about 4 cents on the dollar. If this is true, the $14 trillion rise in household net worth between 1995 and 2000 created an additional $567 billion in household consumption. This increase in net worth was driven almost entirely by the rising values of security prices in the contemporary bull market. This study presents evidence that this "wealth effect" is in fact asymmetrical and that this asymmetry reversed some time during the 1970's or 1980's. Prior to this reversal point positive changes in slock …