The Effect of Housing and Stock Wealth Losses on Spending in the Great Recession

56 Pages Posted: 12 Jun 2015

See all articles by Marco Angrisani

Marco Angrisani

Center for Economic and Social Research (CESR)

Michael D. Hurd

RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Susann Rohwedder

RAND Corporation

Multiple version iconThere are 2 versions of this paper

Date Written: March 10, 2015

Abstract

We use panel data at the household level on a complete inventory of household spending and assets to estimate the spending response to the sharp and largely unexpected declines in house and stock market prices that occurred in the Great Recession. Our data span the period 2001-2011, so that we are able to separate trends in spending from innovations in response to unexpected wealth change. We find the marginal propensity to consume out of an unexpected housing wealth change to be seven cents per dollar, and about four cents per dollar out of financial wealth.

Suggested Citation

Angrisani, Marco and Hurd, Michael D. and Rohwedder, Susann, The Effect of Housing and Stock Wealth Losses on Spending in the Great Recession (March 10, 2015). RAND Working Paper Series WR-1101. Available at SSRN: https://ssrn.com/abstract=2616945 or http://dx.doi.org/10.2139/ssrn.2616945

Marco Angrisani (Contact Author)

Center for Economic and Social Research (CESR) ( email )

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Michael D. Hurd

RAND Corporation ( email )

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State University of New York at Stony Brook - College of Arts and Science - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Susann Rohwedder

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

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