Wealth Effects on Consumption Across the Wealth Distribution: Empirical Evidence

56 Pages Posted: 20 May 2015 Last revised: 18 Dec 2015

See all articles by Luc Arrondel

Luc Arrondel

Paris School of Economics (PSE)

Pierre Lamarche

European Union - Eurostat

Frederique Savignac

University Paris-Est Créteil (UPEC)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2015

Abstract

This paper studies the heterogeneity of the marginal propensity to consume out of wealth using French household surveys. We find decreasing marginal propensity to consume out of wealth across the wealth distribution for all net wealth components. The marginal propensity to consume out of financial assets tend to be higher compared with the effect of housing assets, excepted in the top of the wealth distribution. Consumption is less sensitive to the value of the main residence than to other housing assets. We also investigate the heterogeneity arising from indebtedness and from the role of housing assets as collateral.

Keywords: Consumption, Marginal propensity to consume out of wealth, Policy distributive effects, Households survey

JEL Classification: D12, E21, C21

Suggested Citation

Arrondel, Luc and Lamarche, Pierre and Savignac, Frederique, Wealth Effects on Consumption Across the Wealth Distribution: Empirical Evidence (December 2015). Banque de France Working Paper No. 552. Available at SSRN: https://ssrn.com/abstract=2607504 or http://dx.doi.org/10.2139/ssrn.2607504

Luc Arrondel (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Pierre Lamarche

European Union - Eurostat ( email )

Luxembourg, L-2920
Luxembourg

Frederique Savignac

University Paris-Est Créteil (UPEC) ( email )

61 avenue du General de Gaulle
Creteil cedex, 94010
France

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