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 …

dynamics. When the model is modified in a way that permits it to match empirical measures of wealth inequality in the U.S., we … how the shock is distributed across categories of households (e.g., low-wealth versus high-wealth households) …