Wealth and Consumption in Australia

We revisit the evidence on the effect of changes in household wealth on consumption using a panel of Australian states. We find that a one per cent increase in the value of housing wealth increases consumption by about 0.16 per cent in the long-run, with half of the response occurring within two quarters. The size of this response has been stable over time and largely reflects changes in spending on motor vehicles, durable goods and other discretionary items. We then run counterfactual scenarios using the Reserve Bank of Australia's macroeconometric model, MARTIN, to assess the macroeconomic effects of changes in household wealth. We show that increases in household wealth supported household spending between 2013 and 2017, when growth in disposable income was weak.     

House Prices,Wealth and Consumption: New Evidence from Australia and Canada

Over the past two decades, a number of countries have experienced appreciation in house prices at the same time that aggregate consumption has increased. This paper tests alternative hypotheses for this phenomenon by using repeated household surveys from Australia and Canada to identify the transmission mechanism that links consumption and household wealth. The empirical analysis suggests that neither a direct wealth effect nor a common causal factor likely accounts for the observed correlation between wealth and consumption in these two countries. Rather, indirect factors such as collateral effects arising from relaxation of credit constraints are a more likely explanation.     

Sticky Consumption and Wealth Effects in Switzerland

When assessing the effect of changes in wealth on household expenditures, most empirical studies have used cointegration‐based approaches. These approaches rely on the existence of a stable long‐run relationship among consumption, wealth, and income. However, in Switzerland no such relationship seems to be present after 2001. Motivated by this issue, this paper applies a recently suggested approach to estimating long‐run wealth effects on consumption that does not rely on cointegration. This new approach relies on sticky consumption growth, which can be motivated by consumption habits or sticky expectations. In both cases, long‐run wealth effects are the result of short‐run reactions of households to changes in wealth which become long‐lasting. Using this methodology, the estimated wealth effects on consumption in Switzerland are larger than suggested by cointegration‐based estimates. Furthermore, the results show that there seems to be a remarkably high degree of consumption stickiness in Switzerland.     

Inequality and Wealth: Comparing the Gender Wealth Gap in Switzerland and Australia

ABSTRACT

Although the gender gap in incomes has been extensively researched, scant attention has been paid to the gender wealth gap. This paper compares the gender wealth gap in Australia with that of Switzerland. Using data from the 2010 Household, Income, and Labour Dynamics in Australia (HILDA) and the 2012 Swiss Household Panel (SHP), this study attributes the gender wealth gap to differences in permanent income and education. Furthermore, the gender wealth gap is much larger in Switzerland than in Australia. The study links this finding to the type of wealth held by individuals in these two countries. Differences in wealth accumulation among women in Switzerland and Australia are likely to be linked to the housing market and to family policies for (single) mothers.     

澳大利亚家庭财富的结构与分配

《经济与社会变化的动态研究——澳大利亚家庭收入与就业动态调查之分析》,是一项大型的研究计划。本文只是该计划之下的一个子课题。这项子课题获得澳大利亚研究理事会的资助,(拨款编号为DPO342970)。我们在文中引用的数据,部分来自家庭与社区服务部辖     

The Structure and Distribution of Household Wealth in Australia

This article uses data from the second wave of the Household, Income and Labour Dynamics in Australia (or HILDA) Survey to provide an overview of the structure and distribution of household wealth in Australia. The data confirm that wealth is very unequally distributed, with the bottom half of the distribution owning less than 10 per cent of total household net worth, while the wealthiest 10 per cent account for 45 per cent. The article also includes an analysis of the factors associated with household wealth that indicates that wealth is significantly related to a range of factors including age, country of birth, parental occupational status, education, marital status, working hours, income, self‐reported savings behaviour, a willingness to take risks and even various lifestyle behaviours, such as smoking and alcohol consumption.     

Consumption and Income Inequality in Australia

Consumption may be a more appropriate measure of household well-being than income or earnings. Using four ABS Household Expenditures Surveys collected between 1975 and 1993, we compare trends in consumption and income inequality among Australian households. We find that consumption is much more equal than income. While there were significant increases in both income and consumption inequality, consumption inequality rose by much less. One interpretation of the results is that some income inequality in Australia reflects transitory fluctuations which households can smooth,'and that part of the growth in income inequality reflects an increase in these transitory fluctuations.     

The Distribution and Composition of Personal Sector Wealth in Australia

This article begins by noting the scarcity of information on the distribution of wealth in Australia, and the many reasons for wanting to have such information. The potential role of the tax system in affecting the composition of wealth is noted, and the taxation of savings is briefly described. A number of different methods of estimating the distribution of wealth are discussed. Estimates for the distribution and composition of wealth in Australia in 1986 are derived from the 1986 Income Distribution Survey, which suggest that the wealthiest ten per cent of income units hold 55 per cent of total wealth. The composition of wealth is broadly consistent with the expected impact of the tax system.     

The Relationship between Income,Wealth and Age in Australia

This article analyses the relationship between income, wealth, wealth‐adjusted income and age in Australia using a 2009–10 cross‐sectional data set. The main findings are: (i) wealth and wealth‐adjusted income generally rise with age, while income is constant across the life cycle; (ii) both income inequality and wealth inequality rise until mid‐life and fall thereafter, while wealth‐adjusted income inequality depends on the method of calculation used, one showing a fall in later life and another showing no fall; and (iii) after income, wealth and wealth‐adjusted income inequalities are adjusted for age, underlying inequality is lower in all three cases.     

Relative Wealth, Consumption Taxation, and Economic Growth

This paper examines the role of the relative wealth-induced status motive in affecting the neutrality of consumption taxation in an optimizing growth model. It is found that a key factor determining the validity of the neutrality of consumption taxation in both the level sense and the growth rate sense is the desire for relative wealth-induced social status. When individuals care about their relative wealth, a rise in consumption tax enhances the steady-state level of capital stock and consumption. Furthermore, if the production function takes a linear technology form as the engine of sustained growth, then increases in consumption taxation raise the economy's long-run growth rate. In addition, an optimal consumption tax policy provides full subsidies to consumption so as to induce the economy to achieve the social optimum and the optimal growth rate.     

Wealth Effects and Consumption: A Panel VAR Approach

We provide new evidence on the comparison between the stock and housing wealth effects on consumption. Using a panel VAR approach applied to OECD data, we find evidence that the stock market wealth effect is generally the larger. However, with regard to the evolution of asset wealth effects over time, our findings show that the housing wealth effect has outweighed the share market wealth effect in the last decade. We further find that asset wealth has asymmetric effects on consumption, with stronger and more persistent effects from positive asset wealth shocks. Our results have important monetary policy implications for both stock and real estate markets, and offer timely insights into the desirability of current proposals to reduce house price volatility, such as through macro prudential regulations.     

股票财富、信号传递与中国城镇居民消费

本文尝试在消费者最优选择模型基础上,通过引入居民的借贷约束和预防性储蓄,推导出能够检验股市的财富效应、信号传递效应和不对称效应的实证分析框架,并利用中国的季度数据考察中国股市变动对居民消费的影响。与国内相关文献所得结论不同,本文的研究表明:如果不仅考虑股票价格变动的财富效应,而且考虑其信号传递效应,那么中国股票市场对城镇居民消费存在着较为明显的影响。分析也表明,如果用工资而不是人均可支配收入度量人力资本回报,中国股票市场同样存在正的财富效应,且这种财富效应具有明显的不对称性,反映经济基本面变化的股价变动对中国居民消费具有长期影响,投机因素引起的股价变动对中国居民消费的影响甚微。     

Top Wealth Shares in Australia 1915–2012

Combining data from surveys, inheritance tax records, and rich lists, we estimate top wealth shares for Australia from World War I until the present day. We find that the top 1 percent share declined by two‐thirds from 1915 until the late 1960s, and rose from the late 1970s to 2010. The recent increase is sharpest at the top of the distribution, with the top 0.001 percent wealth share tripling from 1984 to 2012. The trend in top wealth shares is similar to that in Australian top income shares (though the drop in the first half of the twentieth century is larger for wealth than income shares). Since the early twentieth century, top wealth shares in Australia have been lower than in the U.K. and U.S.     

Wealth Breeds Decline: Reversals of Leadership and Consumption Habits

In a two-region model, we formalize Kindlebergers idea that wealth breeds first more wealth, and then decline: when one region leads, its inhabitants develop consumption habits incompatible with the necessary investment in knowledge to remain the leader. This gives the other region a window of opportunity to gain economic primacy. The theory suggests that differences across regions that have similar characteristics may persist even if physical capital flows from rich to poor regions. We study patterns of overtaking, alternating primacy, irreversible decline, and monotonic convergence, according to the initial dispersion of knowledge and the strength of consumption habits. Even though exogenous factors may matter on some occasions, we show that they are not necessary to reverse economic leadership.     

房价收入比与家庭消费——基于房产财富效应的视角

运用中国家庭金融调查(CHFS)2011年、2013年和2015年数据,基于调查数据构建和计算城市房价收入比,分析房价收入比对家庭消费房产财富效应的影响,并进一步考察房价收入比对拥有两套及以上住房、有房出租、拥有大小产权房和不同收入阶层家庭消费房产财富效应的影响差异。研究发现:房价收入比高时家庭消费水平也相应较高,但房价收入比高却显著降低了家庭消费的房产财富弹性;拥有两套及以上住房、有房出租家庭消费的房产财富效应受房价收入比高的弱化影响更小,拥有大产权比小产权房更能抵御房价收入比高对消费房产财富效应的弱化影响,高收入家庭的抵御能力更强。     

The Distribution of Wealth in Australia — A Survey*

This paper surveys and analyzes the available evidence on the distribution of wealth in Australia. On the basis of this evidence, it is argued that the cross-section distribution of personal wealth reveals considerable concentration in the top tail, with the top 1 per cent of adult individuals holding around 25 per cent of private wealth. The inequality of wealth revealed in the cross-section distribution among the top 10 per cent of wealth holders is not significantly reduced when adjustments are made to correct for life-cycle influences. Although the proportion of wealth held by the top 1 per cent of adult individuals has decreased sharply since World War I, the second to tenth percentiles have almost the same proportion in the 1960s and 1970s as in 1915.     

How Much Do We Know About Wealth Distribution in Australia?

This paper surveys what is known about wealth distribution in Australia and concludes that our knowledge is scanty. The most reliable evidence comes from studies using probate returns and with the abolition of estate duties, these studies are becoming out of date. However, it is clear that wealth is very unequally distributed. The top 5 per cent of adult individuals own between 40 and 50 per cent of the wealth. This inequality is not just due to life cycle effects, and there is no strong evidence that wealth distribution has become more equal in Australia in the period since the First World War.     

Consumption, Wealth, and Indebtedness in the Context of Uncertainty: The Consumption Function Meets Portfolio Theory

The objective of this paper is to provide a sound theoretical framework for the empirical analysis of consumer indebtedness, by integrating Portfolio theory with the Life-Cycle hypothesis (LCH) model of consumption. Modern versions of this LCH theory almost always assume that utility is additive over time, but in this study, the multiplicative Cobb–Douglas function is used. The new synthesis also explains the stochastic properties of consumption more fully and clearly than previous studies, in particular the uncertainty arising from rates of return on risky assets. The new theory will also help to improve the explanation of the surprise changes in consumption because these sources of risk are incorporated explicitly into the analysis.