Wealth Effects in Emerging Market Economies

42 Pages Posted: 29 Jan 2009

See all articles by Tuomas A. Peltonen

Tuomas A. Peltonen

European Central Bank (ECB)

Ricardo M. Sousa

University of Minho; Economic Policies Research Unit (NIPE); London School of Economics & Political Science (LSE) - Financial Markets Group; London School of Economics

Isabel Vansteenkiste

European Central Bank (ECB)

Date Written: January 20, 2009

Abstract

We build a panel of 14 emerging economies to estimate the magnitude of housing, stock market, and money wealth effects on consumption. Using modern panel data econometric techniques and quarterly data for the period 1990:1-2008:2, we show that: (i) wealth effects are statistically significant and relatively large in magnitude; (ii) housing wealth effects tend to be smaller for Asian emerging markets while stock market wealth effects are, in general, smaller for Latin American countries; (iii) housing wealth effects have increased for Asian countries in recent years; and (iv) consumption reacts stronger to negative than to positive shocks in housing and financial wealth.

Keywords: wealth effects, consumption, emerging markets

JEL Classification: E21, E44, D12

Suggested Citation

Peltonen, Tuomas A. and Sousa, Ricardo Magalhaes and Vansteenkiste, Isabel, Wealth Effects in Emerging Market Economies (January 20, 2009). ECB Working Paper No. 1000, Available at SSRN: https://ssrn.com/abstract=1334575

Tuomas A. Peltonen

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Ricardo Magalhaes Sousa (Contact Author)

University of Minho ( email )

Campus Gualtar
Braga, 4710-057
Portugal
+351253604584 (Phone)
+351253676375 (Fax)

HOME PAGE: http://www.eeg.uminho.pt/economia/rjsousa

Economic Policies Research Unit (NIPE) ( email )

Campus de Gualtar
Braga, 4710-057
Portugal
+351253604584 (Phone)
+351253676375 (Fax)

HOME PAGE: http://www.eeg.uminho.pt/economia/rjsousa

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

London School of Economics ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://econ.lse.ac.uk

Isabel Vansteenkiste

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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