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Kaveh Majlesi. Photo.

Kaveh Majlesi

Associate professor

Kaveh Majlesi. Photo.

Stock Market Returns and Consumption

Author

  • Marco Di Maggio
  • Amir Kermani
  • Kaveh Majlesi

Summary, in English

This paper employs Swedish data on households' stock holdings to investigate how consumption responds to changes in stock market returns. We instrument the actual capital gains and dividend payments with past portfolio weights. Unrealized capital gains lead to a marginal propensity to consume of 23% for the bottom 50% of the wealth distribution and about 3% for the top 30% of the wealth distribution. Household consumption is significantly more responsive to dividend payouts across all parts of the wealth distribution. Our findings are consistent with households treating capital gains and dividends as separate sources of income.

Department/s

  • Department of Economics

Publishing year

2020

Language

English

Pages

3175-3219

Publication/Series

Journal of Finance

Volume

75

Issue

6

Document type

Journal article

Publisher

Wiley-Blackwell

Topic

  • Economics

Status

Published

ISBN/ISSN/Other

  • ISSN: 0022-1082