Understanding Trend and Cycle in Asset Values: Reevaluating the Wealth Effect on Consumption

By Martin Lettau, Sydney C. Ludvigson. 2004

611 citations recorded by the source corpus.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/2f5da88119b250b96e0e6597f03589eb8a7a87ac

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Citations in the corpus

Housing wealth, financial wealth, and consumption: New evidence from micro data (2009, positive): “These models predict that unexpected wealth shocks change the permanent incomeof households and thereby affect the lifecycle pattern of savings and consumption (Lettau and Ludvigson, 2004).”
Testing Models of Low‐Frequency Variability (2006, neutral): “The apparent source of this rejection is the large increase in the consumption-income ratio over the 1985-2004 period, a subject that has attracted much recent attention (for example, see Lettau and Ludvigson (2004) for an explanation based on increases in asset values.)”
What Drives Personal Consumption? The Role of Housing and Financial Wealth (2009, neutral): “In particular, the above papers do not investigate housing wealth effect (Bertaut, 2002 and Labhard et al., 2005), use annual data (Case et al., 2005 and in part Catte et al., 2004), relatively few countries (Bertaut, 2002; Catte et al., 2004 and Cardarelli et al., 2008) or proxy wealth variables…”
Stock Market Wealth and the Real Economy: A Local Labor Market Approach (2019, methodology): “The literature using aggregate time series data finds mixed evidence (see e.g. Poterba and Samwick, 1995; Davis and Palumbo, 2001; Lettau et al., 2002; Lettau and Ludvigson, 2004; Carroll et al., 2011).”
Intertemporal Substitution and Risk Aversion (2007, methodology): “This is the model of Lucas (1978) and Breeden (1979).”
An Estimation of Economic Models with Recursive (2007, positive): “10 Lettau and Ludvigson (2004) found that quarterly consumption growth is predictable by one lag of wealth growth, a variable that is highly correlated with SPEX, and results (not reported) confirm that it is also predictable by one lag of SPEX.”
Stock Market Returns and Consumption (2020, background): “15 See Lettau and Ludvigson (2004) and Campbell, Pflueger and Viceira (2015) for further discussion of this point.”
The Decline in Household Saving and the Wealth Effect (2004, methodology): “Lettau and Ludvigson (2004) claim that as much as 88% of postwar variation in household wealth is generated by 17 Nominal values are converted to 1996 dollars using the GDP personal consumption deflator.”
The Effect of Unconventional Fiscal Policy on Consumption Expenditure (2016, neutral): “21The increase in VAT could possibly offset a more distortionary tax and result in a positive wealth effect but empirical evidence document a small wealth effect on consumption (see, e.g., Lettau and Ludvigson (2004)). to our findings.”
Stock Market Volatility and the Business Cycle (2010, result): “This result is consistent with Lettau and Ludvigson (2004), who also find that returns exert only a limited influence on consumption.”
The Impact of Monetary Policy Shocks on Stock Prices: Evidence from Canada and the United States (2010, background): “…these theoretical considerations, in this paper we specifically address two important and related empirical issues: whether trade openness, financial market openness, or macroeconomic interdependence matter for (i) the impact on and (ii) the transmission to stock prices of monetary policy shocks.”