Downloads
wp201321.pdf
PDF | 514.56 KB
We estimate marginal propensities to consume from wealth shocks for Italian households. Large asset price shocks in 2008 underpin an IV estimator. A euro fall in financial or risky financial wealth resulted in cuts in annual total (non-durable) consumption of 5-9 (3.5-6) cents. There is evidence of effects for food spending. Responses of total and non-durable spending to changes in housing wealth are 0.2 to 0.4 cents/euro. Counterfactuals indicate financial wealth effects were important (relative to other factors) for consumption falls in 2008/09. Thus wealth effects on consumption can be important for households' welfare and aggregate outcomes.
Authors
Research Associate University of Bologna
Matthew is Associate Professor at the University of Bologna focusing on consumption and savings choices and how policy affects them.
Research Associate University of Bologna
Renata is an Associate Professor at the University of Bologna and IFS Research Associate, working on household consumption, saving and labour supply.
Serena Trucchi
Working Paper details
- DOI
- 10.1920/wp.ifs.2013.1321
- Publisher
- Institute for Fiscal Studies
Suggested citation
R, Bottazzi and S, Trucchi and M, Wakefield. (2013). Wealth effects and the consumption of Italian households in the Great Recession. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/wealth-effects-and-consumption-italian-households-great-recession-0 (accessed: 25 April 2024).
More from IFS
Understand this issue
If you can’t see it, you can’t be it: role models influence female junior doctors’ choice of medical specialty
24 April 2024
Retirement is not always a choice that workers can afford to make
6 November 2023
How did parents’ experiences in the labour market shape children’s social and emotional development during the pandemic?
1 August 2023
Policy analysis
Three ways to improve the design of the UK’s overseas aid spending target
18 January 2024
Distributional analysis of Ghana’s tax system
18 December 2023
Progression of nurses within the NHS
12 April 2024
Academic research
Evaluating pricing health insurance in lower-income countries: A field experiment in India
14 March 2024
Saving by buying ahead: stockpiling in response to lump-sum payments
2 February 2024
Labour market inequality and the changing life cycle profile of male and female wages
15 April 2024