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Luigi Pistaferri
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Journal Articles
Decomposing the Wealth Effect on Consumption
UnavailablePublisher: Journals Gateway
The Review of Economics and Statistics (2017) 99 (4): 710–721.
Published: 01 October 2017
Abstract
View articletitled, Decomposing the Wealth Effect on Consumption
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for article titled, Decomposing the Wealth Effect on Consumption
We decompose the wealth effect on consumption into two components. First, we distinguish between exogenous and endogenous wealth changes. Second, we distinguish between anticipated and unanticipated exogenous changes. We estimate the impact of exogenous components using data from the 2008—2010 panel of the Italian Survey of Household Income and Wealth. The wealth effect is about 3 cents per (unexpected) euro increase in wealth and driven by house price changes. The consumption response to anticipated changes in wealth is of similar magnitude and also driven by housing. We show that these findings are consistent with binding borrowing constraints.
Includes: Supplementary data
Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2001) 83 (3): 465–476.
Published: 01 August 2001
Abstract
View articletitled, Superior Information, Income Shocks, and the Permanent Income Hypothesis
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for article titled, Superior Information, Income Shocks, and the Permanent Income Hypothesis
According to the permanent income hypothesis with quadratic preferences, households save for a rainy day the transitory component of income innovations and consume entirely the permanent one. The model also rules out precautionary saving. Typically, income shock components are not separately observable, and information on the conditional variance of income is hard to come by. We show how to combine income realizations with subjective expectations to identify separately the transitory and the permanent shock to income and to obtain a measure of idiosyncratic uncertainty, thus providing a powerful test of the theory in short panels. The empirical analysis is performed on a sample of Italian households drawn from the 1989–1991 Survey of Household Income and Wealth.