This paper investigates the effects of wealth on consumer spending in the United States. A traditional life-cycle model … is estimated first. Although it does find a statistically significant wealth effect, its findings are unusable due to the … offered. First, wealth is divided into stock market and non-stock market components, second into liquid and illiquid …

This paper studies the role of detrended wealth in predicting stock returns. We call a transitory movement in wealth … data, we find that these trend deviations in wealth are strong predictors of both real stock returns and excess returns … forecasting variables. ; Why should wealth, detrended in this way, forecast asset returns? We show that a wide class of optimal …

wealth distribution. The requirement introduces a positive dependence between the intertemporal elasticity of substitution … and household wealth. This dependence implies a transition phase during which the growth rate of per-capita quantities … rise toward their steady-state values and the distributions of wealth, consumption, and permanent income become more …

The effect of wealth on consumption is an issue of longstanding interest to economists. Analysts believe that … fluctuations in household wealth have driven major swings in economic activity. This paper considers so-called wealth effects …—the impact of changes in wealth on household consumption and the overall macroeconomy. There is an extensive existing literature …

This paper explores the household behavior that underlies the link between wealth and consumption at the aggregate … level. One possibility is that changes in wealth directly cause changes in consumption through their effect on households … future income. Based on analysis of household-level data from the Consumer Expenditure Survey, we find that direct wealth …