Stock Market Returns and Consumption

Marco Di Maggio, Amir Kermani, Kaveh MajlesiFinance公司金融UTD24

Journal of Finance2020-07-27National Bureau of Economic Research; University of California, BerkeleyDOI

Citations194

Influential4

References82

ABSTRACT 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.

Marginal propensity to consumeDividendEconomicsPortfolioStock (firearms)Consumption (sociology)Monetary economicsDistribution (mathematics)Stock marketFinancial economicsCapital (architecture)Finance