Distributional Consequences of Asset Price Inflation in the Euro Area

22 Pages Posted: 21 Jun 2016

See all articles by Klaus Adam

Klaus Adam

University of Mannheim; European Central Bank (ECB) - Department of Research; Centre for Economic Policy Research (CEPR)

Panagiota Tzamourani

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: 2015

Abstract

We study the distributional consequences of housing price, bond price and equity price increases for Euro Area households using data from the Household Finance and Consumption Survey (HFCS). The capital gains from bond price and equity price increases turn out to be concentrated among relatively few households, while the median household strongly benefits from housing price increases. The capital gains from bond price increases (relative to household net wealth) do not correlate with household net wealth (or income). Bond price increases thus leave net wealth inequality largely unchanged. In contrast, equity price increases largely benefit the top end of the net wealth (and income) distribution, thus amplify net wealth inequality. Housing price increases display a hump shaped pattern over the net wealth distribution, with the poorest and richest households benefitting least. With regard to the latter finding there exists considerable heterogeneity across Euro Area countries.

Keywords: monetary policy, asset prices, net wealth distribution, inequality, household survey

JEL Classification: D14, D31, E21, E31, E52, E58

Suggested Citation

Adam, Klaus and Tzamourani, Panagiota, Distributional Consequences of Asset Price Inflation in the Euro Area (2015). Bundesbank Discussion Paper No. 27/2015. Available at SSRN: https://ssrn.com/abstract=2797052

Klaus Adam (Contact Author)

University of Mannheim ( email )

Department of Economics
L7 ,3-5
Mannheim, 68131
Germany

HOME PAGE: http://adam.vwl.uni-mannheim.de/1528.0.html

European Central Bank (ECB) - Department of Research ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 6597 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Panagiota Tzamourani

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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