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Stock Market Returns and Consumption / Marco Di Maggio, Amir Kermani, Kaveh Majlesi.
- Format:
- Book
- Author/Creator:
- Di Maggio, Marco.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24262.
- NBER working paper series no. w24262
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- This paper employs Swedish data on households' stock holdings to investigate how consumption responds to changes in stock market returns. We instrument the actual capital gains and dividend payments with past portfolio weights. Unrealized capital gains lead to a marginal propensity to consume (MPC) of 23% for the bottom 50% of the wealth distribution and about 3% for the top 30% of the wealth distribution. Households' consumption is significantly more responsive to dividend payouts across all parts of the wealth distribution. Our findings are consistent with households treating capital gains and dividends as separate sources of income.
- Notes:
- Print version record
- January 2018.
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