Financial and Housing Wealth and Consumption Spending: Cross-Country and Age Group Comparisons

Abstract

In this study we explore the link between household expenditures and wealth across the age distribution by examining the elasticity of consumption spending from different types of wealth. We use a new source of harmonized wealth micro data for five countries: Canada, Finland, Italy, Germany and the US. Our results indicate that the effect of housing wealth dominates the effect of financial wealth in Finland, Italy, Germany, the US, and also in Canada for certain age groups. We find consumption responsiveness to housing wealth to be statistically significantly lower for younger households. The analysis also confirms the existence of between-country differences.