TY - JOUR
T1 - Disaggregate wealth and aggregate consumption
T2 - an investigation of empirical relationships for the G7
AU - Byrne, Joseph P.
AU - Davis, E. Philip
PY - 2003/5/31
Y1 - 2003/5/31
N2 - To date, studies of wealth effects on consumption have mainly used aggregate wealth definitions on a single-country basis. This study seeks to break new ground by analysing disaggregated financial wealth in consumption functions for G7 countries. Contrary to earlier empirical work, we find that illiquid financial wealth (i.e. securities, pensions and mortgage debt) tends to be a more important long-run determinant of consumption than liquid financial wealth. These results imply potential instability in consumption functions employing aggregate wealth. Our results are robust using SURE; when testing with a nested specification; and when using a linear model.
AB - To date, studies of wealth effects on consumption have mainly used aggregate wealth definitions on a single-country basis. This study seeks to break new ground by analysing disaggregated financial wealth in consumption functions for G7 countries. Contrary to earlier empirical work, we find that illiquid financial wealth (i.e. securities, pensions and mortgage debt) tends to be a more important long-run determinant of consumption than liquid financial wealth. These results imply potential instability in consumption functions employing aggregate wealth. Our results are robust using SURE; when testing with a nested specification; and when using a linear model.
KW - disaggregate wealth
KW - aggregate consumption
KW - instability
UR - http://www.scopus.com/inward/record.url?scp=0038577056&partnerID=8YFLogxK
U2 - 10.1111/1468-0084.00044
DO - 10.1111/1468-0084.00044
M3 - Review article
AN - SCOPUS:0038577056
SN - 0305-9049
VL - 65
SP - 197
EP - 220
JO - Oxford Bulletin of Economics and Statistics
JF - Oxford Bulletin of Economics and Statistics
IS - 2
ER -