Dynamic spending responses to wealth shocks evidence from quasi lotteries on the stock market Asger Lau Andersen, Niels Johannesen and Adam Sheridan
By: Andersen, Asger Lau
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Contributor(s): Johannesen, Niels | Sheridan, Adam.
Material type: 
ArticleSubject(s): CONSUMO FAMILIAR | ECONOMIA DOMESTICA | SOCIEDADES DE INVERSION | MACROECONOMIA | CONSUMIDORES
In:
The American Economic Review v. 6, n. 3, September 2024, p. 434-452.Summary: How much and over what horizon do households adjust their consumption in response to stock market wealth shocks? We address these questions using granular data on spending and stock portfolios from a large bank and exploiting lottery-like variation in gains across investors with similar portfolio characteristics. Consistent with the permanent income hypothesis, spending responses to stock market gains are immediate and persistent. The monthly responses cumulate to marginal propensities to consume of 4.4 percent over one year and 16 percent over three years. The results suggest that inattention attenuates household responses to stock market cycles over horizons as long as one year.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 2145/2024/3-3 (Browse shelf) | Available | OP 2145/2024/3-3 |
Bibliografía.
How much and over what horizon do households adjust their consumption in response to stock market wealth shocks? We address these questions using granular data on spending and stock portfolios from a large bank and exploiting lottery-like variation in gains across investors with similar portfolio characteristics. Consistent with the permanent income hypothesis, spending responses to stock market gains are immediate and persistent. The monthly responses cumulate to marginal propensities to consume of 4.4 percent over one year and 16 percent over three years. The results suggest that inattention attenuates household responses to stock market cycles over horizons as long as one year.
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