Kaveh Majlesi
Associate professor
Stock Market Returns and Consumption
Author
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