Speaker:
Serena Trucchi
- University College London
Tuesday, May 30, 2017
at
12:30 PM
Polo Santa Marta, Via Cantarane 24, Room 1.59
We estimate marginal propensities to consume from wealth shocks for Italian households early in the Great Recession. Large asset-price shocks in 2007-2008 underpin instrumental variables. A euro fall in risky financial wealth resulted in cuts in annual total (non-durable) consumption of 8.5-9 (5.5-5.7) cents. We find small effects on food spending. Counterfactuals indicate financial-wealth effects were relatively important for consumption falls in Italy in 2007/08. The estimated effects are consistent with a simulated lifecycle model that captures the wealth shock. Also consistent with the model are findings of stronger wealth effects for agents who were pessimistic about stock returns.
- Programme Director
-
Alessandro
Bucciol
-
External reference
-
- Publication date
-
September 15, 2016
