Valérie Chauvin

Wealth Effects on Private Consumption: the French Case

This paper studies the relationship between consumption and wealth based on the concept of cointegration. The analysis focuses on French data over the 1987 - 2006 period. This relationship is expressed in two ways: in terms of Marginal Propensity to Consume out of wealth (MPC) and in terms of Elasticity of consumption to wealth. Three concepts of consumption are investigated: total households consumption expenditure, consumption excluding financial services and consumption excluding durable goods. Different estimators are also considered. Based on the MPC approach, when considered as permanent by households, an increase (decrease) in total wealth of one euro would lead to an increase (decrease) of 1 cent in total consumption. In terms of elasticity, an increase (decrease) of 10% in wealth would imply also a relatively small impact of 0.8 to 1.1% on consumption depending on the concept of consumption considered. In most cases, the effect of a change in financial wealth is bigger than of a change in housing wealth. The results indicate that the wealth effects in France are smaller than in the UK and US but close to what is observed in Italy. In addition, any deviation of the variables from their common trends is corrected at first by adjustments in disposable income in line with what has been uncovered by studies on Germany and consistent with the ”saving for the rainy days” approach of Campbell (1987). But our results contrast with the seminal study of Lettau and Ludvigson (2004) in the US where asset prices make the bulk of the adjustment.

Croissance.net: Perspectives 2000-2001 pour l'économie française

Au debut du printemps 2000, les perspectives de croissance sont tres favorables dans la quasi-totalite des zones de l’economie mondiale. Apres une croissance de 2,5 % en 1998 et de 3,2 % en 1999, la croissance mondiale pourrait etre de 4,2 % en 2000 et de 3,9 % en 2001 (tableau 2). Cette vigueur resulte de la conjonction de la poursuite d’une forte expansion aux Etats-Unis, d’une nette reprise dans la zone euro, de la rapide sortie de recession au Royaume-Uni, du dynamisme retrouve des nouveaux pays industrialises d’Asie (NPIA) et des economies en transition, enfin du rebond en Russie et en Amerique latine. A l’echelle mondiale demeurent quelques exceptions, la plus notable etant celle du Japon ou la relance publique n’a pas encore ete relayee par un net dynamisme de la demande privee (...).