Wealth Effects Out Of Financial And Housing Wealth: Cross Country And Age Group Comparisons

To explore the link between household consumption and wealth, the authors use a new source of harmonized microdata (Luxembourg Wealth Study). They investigate whether there are differences in wealth effects from different types of wealth and across age groups. They consider three countries: Canada, Italy and Finland. They find that the overall wealth effect from housing is stronger than the effect from financial wealth for the three countries in the sample. Additionally, in accordance with the life-cycle theory of consumption, they find the housing wealth effect to be significantly lower for younger households. They also find between-country differences in the wealth effect.