Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/91510
Authors: 
Botazzi, Renata
Trucchi, Serena
Wakefield, Matthew
Year of Publication: 
2013
Series/Report no.: 
IFS Working Papers W13/21
Abstract: 
We estimate marginal propensities to consume from wealth shocks for Italian households. Large asset price shocks in 2008 underpin an IV estimator. A euro fall in financial or risky financial wealth resulted in cuts in annual total (non-durable) consumption of 5-9 (3.5-6) cents. There is evidence of effects for food spending. Responses of total and non-durable spending to changes in housing wealth are 0.2 to 0.4 cents/euro. Counterfactuals indicate financial wealth effects were important (relative to other factors) for consumption falls in 2008/09. Thus wealth effects on consumption can be important for households' welfare and aggregate outcomes.
Subjects: 
wealth effects
household consumption
2008 crisis
JEL: 
D12
D91
G01
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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