The decline in household saving and the wealth effect

The decline in household saving and the wealth effect

Using a unique set of household-level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household-specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significa...

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Veröffentlicht in:The review of economics and statistics 2006-02, Vol.LXXXVIII (1), p.20-27
Hauptverfasser: Juster, F Thomas, Lupton, Joseph P, Smith, James P, Stafford, Frank
Format: Artikel
Sprache:eng
Schlagworte:
Capital gains
Economic analysis
Empirical tests
Financial assets
Household expenditure
Household savings
Statistical methods
U.S.A
Wealth
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Zusammenfassung:Using a unique set of household-level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household-specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period. Over 5-year periods, the effect of capital gains in corporate equities on saving is substantially larger than the effect of capital gains in housing or other assets. Failure to differentiate wealth effects across asset types results in a significant understatement of their size. Reprinted by permission of the MIT Press
ISSN:0034-6535