
	Where results make sense

Topic: Wealth effect

Related Topics

IQ and the Wealth of Nations

redistribution of wealth

wealth condensation

List of Swedish municipalities by wealth

The Gospel of Wealth

distribution of wealth

Share Our Wealth

Common Wealth Land Party

CIBC Wealth Management

analysis of wealth

wealth in heaven

In the News (Wed 15 Feb 12)

EXECUTIVE POWER

Iran

ANALYSIS

Pakistan

Family compact

	Wealth Effect of Homeownership Contributing to Economy
		A survey on the home wealth effect was presented at a media briefing by NAR during the Realtors® Conference and Expo in Chicago.
		Greenspan theorized that the wealth effect of homeownership was offsetting some of the losses on Wall Street in the overall economy – this survey shows Mr.
		For owners who clearly understand the value of the wealth in their homes as opposed to the value of their stocks, bonds and pension plans, the survey found that three out of four homeowners say their house wealth is greater than their stock wealth.
	www.realtor.org /PublicAffairsWeb.nsf/Pages/WealthEffect?OpenDocument (622 words)

	The Wealth Effect of Homeownership (Site not responding. Last check: 2007-10-18)
		To assess the value of homeownership and the wealth it creates for the typical American household, a recent survey showed three out of four homeowners said their home represents a large portion of wealth, and many use the value of their homes when making important financial decisions.
		The survey by the National Association of REALTORS on the wealth effect of homeownership finds that 16 percent of people with unrealized capital gains have changed their spending or saving behavior as a result.
		For owners who clearly understand the value of the wealth in their homes as opposed to the value of their stocks, bonds and pension plans, the survey found that three out of four home owners say their house wealth is greater than their stock wealth.
	www.illinoisrealtor.org /iar/buy_sell/wealthhousing.html (550 words)

	Wealth effect - Wikipedia, the free encyclopedia
		In economics, the wealth effect is an increase in spending that accompanies an increase in wealth (in absolute terms), or merely a perceived increase in wealth (in relative terms).
		The effect includes the changes in the amounts and composition of consumer consumption caused by changes in consumer wealth.
		The effect's size is governed by a different calculation in either case.
	en.wikipedia.org /wiki/Wealth_effect (300 words)

	Freddie Mac - Home Equity 'Wealth Effect' Fuels Consumer Spending
		First, families view gains in home equity wealth as more "permanent," whereas gains (or losses) in stock market wealth are seen as more "transitory." Consumer spending is more likely to experience a wealth effect from permanent increases in wealth.
		In fact, about three-quarters of all stock market wealth is held by the highest decile (top 10 percent) of income earners in the United States, and almost none by families whose earnings fall in the lowest third of the income distribution.
		As reported by Fed Chairman Alan Greenspan, the effect on personal consumption expenditures generated from realized capital gains on home sales to be about 10 to 15 cents on the dollar, compared with a general "wealth effect" of 3 to 5 cents incorporating all components of household wealth.
	www.freddiemac.com /news/finance/commentary/sp-comm_082203.html (819 words)

	FRB: Speech, Gramlich -- Consumption and the wealth effect: the U.S. and U.K. -- February 20, 2002
		The predicted effect of wealth on consumption has been put to the test in the United States during the past half-decade, and it has passed that test easily.
		In the first quarter of 1995, housing wealth was equal to roughly 1.4 times after-tax income, and by the third quarter of 2001 that ratio increased to about 1.6 without ever moving outside that fairly narrow range.
		In contrast, the ratio of equity wealth to after-tax income soared from 1.1 in early 1995 to 2.6 in early 2000 before subsiding to 1.5 in the third quarter of last year.
	www.federalreserve.gov /boarddocs/speeches/2002/20020220/default.htm (2882 words)

	The illusion of 'wealth effects'
		This argument is a warmed-over version of the misleading notion of the "wealth effect" that kept analysts enthralled during the dotcom mania of the late 1990s.
		As suggested, "wealth effects" are neither necessary nor sufficient conditions for growth.
		In the end, the so-called wealth effect in the US economy is the result of excessive credit expansion.
	in.rediff.com /money/2004/jan/02guest1.htm (840 words)

	June 2001 - In Depth - FRB Dallas
		One source of uncertainty about the stock wealth effect is that we lack enough experience to pin-point how much the decline of the Nasdaq will impact small business formation by affecting the venture capital market.
		Thus, through the wealth effect, the correction reduces the stock wealth boost to consumption by 0.8 percent—the third lower-right number—and the direct boost to GDP by 1/2 percent—the bottom-right corner.
		The third conclusion I draw is that while the conventional stock wealth effect is likely overstated, the underlying impact on consumption and on firms has likely risen over time, due to factors such as the rise of mutual funds and venture capital which have democratized America’s capital markets.
	www.dallasfed.org /research/indepth/2001/id0105.html (1777 words)

	Word Spy - wealth effect
		wealth effect (WELTH uh.fekt; TH as in thin) n.
		Big portfolio gains by investors in recent years have created what economists call the "wealth effect," which has boosted consumer spending, the single biggest factor that has driven the US economy.
		The "wealth effect" means simply that when investors feel more secure about their wealth, they spend more.
	www.wordspy.com /words/wealtheffect.asp (203 words)

	MENAFN - Middle East North Africa . Financial Network News: Negative wealth effect could undermine UAE consumer ... (Site not responding. Last check: 2007-10-18)
		According to the report, the impact of negative wealth effect on consumer confidence is of great concern.
		"Wealth effect can be broadly defined as the impact of asset values on the consumption pattern.
		Wealth elasticity of spending differs in different strata of the society.
	www.menafn.com /qn_news_story_s.asp?StoryId=1093113954 (528 words)

	NAR: Research: NCRER: Real Estate Wealth Effect
		A one-dollar increase in housing wealth or stock wealth each lead to a long-run increase in consumer spending of about 5.5 cents.
		Eighty percent of the effect of housing wealth on consumer spending -- about 4.5 cents -- occurs within one year while it takes several years for stocks to have the same effect on consumer spending.
		This study estimates the impact of changes in financial and housing wealth on the levels of consumer spending and whether housing wealth impacts consumer spending to a larger degree than a change in overall financial wealth.
	www.realtor.org /ncrer.nsf/pages/rewealtheffect (272 words)

	TheStreet.com: So Long, Wealth Effect
		And higher stock valuations have little effect on the current consumption of ordinary American households, since the stock holdings of the bottom 90% remain minor -- and half of all households own no stock at all.
		They were, in effect, converting enthusiastic investment into consumption expenditure through the mechanism of rising valuations.
		For the same reason that the wealth effect did not produce inflation, even a stiff shakeout will not produce a recession.
	www.thestreet.com /_aol/comment/galbraith/922082.html (882 words)

	Wealth effect dents savings : Moneyweb (Site not responding. Last check: 2007-10-18)
		That has led to what economist’s term the wealth effect: when an increase in perceived wealth encourages households to save a lot less than before.
		In its June Quarterly Bulletin, the central bank says the net wealth of the household sector as a percentage of annual disposable income is estimated to have increased unabatedly to 234% during the first half of 2005 from 204% two years before.
		While they may be feeling a comfortable wealth effect for now, few investors actually compare the annual increase in value, less transaction costs, in their residential properties with what they could have achieved in other financial assets, such as equities, over the same period.
	www.moneyweb.co.za /economy/soapbox/689084.htm (1203 words)

	Harcourt Economics (Site not responding. Last check: 2007-10-18)
		For many years economists have argued that the wealth effect--which states that households will spend a larger portion of their income (and save smaller portions) as wealth increases--prevailed.
		One problem of a strong wealth effect is that it widens the business cycle: thus, the goods times are really good, but the bad times are awful.
		One cause for optimism is that the wealth effect has weakened from where it was 10 years ago.
	www.swcollege.com /econ/mankiw/student/ch31/news.html (917 words)

	the wealth effect of owning a home (Site not responding. Last check: 2007-10-18)
		Since the "average" house is worth $153,300, that means in one year the "average" homeowner accumulated $10,884 in wealth -- by doing nothing more than making a mortgage payment (plus taxes and insurance).
		The most common way to "tap in" to unrealized wealth is to refinance and pull cash out of the home, get a home equity line of credit or sell your home.
		Statistics and figures come from the "home wealth" survey of the National Association of Realtors conducted in August and September of 2001.
	www.realestateabc.com /insights/wealth.htm (266 words)

	Real Balances Debate
		While many Neoclassicals cheered this development, there was a sense of unease about these wealth effects for the implications they had for their own macroeconomic theory.
		In a careful and elaborate disquisition and elucidation, Don Patinkin (1948, 1951, 1956) arrayed various arguments in defense of this "wealth effect".
		Don Patinkin (1956, 1972) seemed to agree that outside wealth should be regarded only as the liabilities of the government and real capital.
	cepa.newschool.edu /het/essays/keynes/realbalances.htm (1781 words)

	charles hugh smith-Housing Wealth Effect Shifts Into Reverse
		To summarize: stocks rise and fall over relatively short periods of time, and hence the Wealth Effect is smaller than that created by housing, which rises and falls in much longer cycles.
		This means that the wealth of most American households is now concentrated in their homes.
		Real wealth is the surplus capital accumulated by producing more than you consume--in simple terms, savings which are invested in productive assets.
	www.oftwominds.com /blogmay06/wealth-effect.html (1394 words)

	AEI - Short Publications
		Greenspan put forth a different argument for a rate hike in a rising stock market, the so-called "wealth effect." This is the extra stimulus to demand that occurs when consumers’ wealth increases.
		This nefarious wealth effect is said to be so powerful that it suspends the laws of economics.
		When the wealth effect strikes, demand runs "ahead of supply," leading to a rapid acceleration in inflation.
	www.aei.org /publications/pubID.17630/pub_detail.asp (1196 words)

	Wealth effect, recessions and money supply
		He made this clear when he expressed the opinion that the wealth effect might make itself felt if the economy turned down.
		It's easy to see that Mr Edwards' comment that the wealth effect could help Australia should the economy turn down is based on the dangerous Keynesian fallacy that consumer spending drives the economy.
		The link between the rapid growth of asset values during the last few years and credit expansion is so little understood that it needs to be frequently exposed.
	www.brookesnews.com /030809wealtheffect.html (468 words)

	SSRN-Understanding Trend and Cycle in Asset Values: Bulls, Bears and the Wealth Effect on Consumption by Martin Lettau, ... (Site not responding. Last check: 2007-10-18)
		This Paper uses restrictions implied by cointegration to identify the permanent and transitory elements (the 'trend' and 'cycle') of household asset wealth.
		Transitory wealth shocks are quite persistent, affecting asset values for a number of years.
		We characterize three: a permanent income shock that affects consumption, asset wealth and labour earnings without distorting their long-run equilibrium relation; an income redistributive shock that shifts the composition of income between labour and capital; and a discount rate shock that generates transitory variation in asset values.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=294901 (568 words)

	Return of the wealth effect? - Jun. 6, 2003 (Site not responding. Last check: 2007-10-18)
		Could the rebound in the market mean the return of the "wealth effect," when people feel richer because their portfolios are fatter, and so go out and boost spending, thereby boosting the economy?
		Given the recent history of ups and downs, some consumers and businesses might be inclined to stay on the sidelines for longer than usual, meaning the economic impact of the recent stock market gains might be diluted.
		Sohn believes that, in order for the rally to hold long enough to start generating a "wealth effect," it will have to be accompanied by sustained improvement in corporate profits and stronger GDP growth for at least two or three quarters, a scenario that's not yet in the bag.
	money.cnn.com /2003/06/06/news/economy/stock_effect (726 words)

	NCPA - Economic Issues - Does The Wealth Effect Propel Consumer Spending? (Site not responding. Last check: 2007-10-18)
		Federal Reserve Chairman Alan Greenspan has said increased consumer spending due to stock market gains "has been instrumental in propelling the economy forward." This is the so-called "wealth effect" -- the hypothesis that stockowners react to rising stock values by spending more.
		But economists disagree on how large the wealth effect is and how fast it kicks in.
		Michael Niemira, at the Bank of Tokyo-Mitsubishi, sees some wealth effect in home purchases and in saving for retirement -- but doubts that it leads to consumer spending sprees.
	www.ncpa.org /pd/economy/pdeco/aug985o.html (283 words)

	ESR \| December 24, 2001 \| Stock prices and the 'wealth effect' myth
		Even though the American recession has been declared official the myth of the so-called wealth effect lives on.
		The effect of increasing savings is to lengthen this structure by adding longer and more complex stages to it.
		But note, this is done by increasing the maladjustment between the supply of the product and the demand for the product, which will have the effect of attracting more competition which will then squeeze the firm's profits even as productivity continues to rise.
	www.enterstageright.com /archive/articles/1201/1201wealtheffect.htm (872 words)

	SSRN-Understanding Trend and Cycle in Asset Values: Reevaluating the Wealth Effect on Consumption by Martin Lettau, ... (Site not responding. Last check: 2007-10-18)
		We use empirical techniques that allow us to quantify the relative importance of permanent and transitory innovations in the variation of consumer spending and wealth and find that transitory shocks dominate post-war variation in wealth, while permanent shocks dominate variation in aggregate consumption.
		Although transitory innovations are found to have little influence on consumer spending, they have long-lasting effects on wealth, exhibiting a half-life of a little over two years.
		The findings suggest that most macro models - which make no allowance for transitory variation in wealth that is orthogonal to consumption - are likely to misstate both the timing and magnitude of the consumption-wealth linkage.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=425584 (524 words)

	BW Online \| October 19, 2000 \| Will a Swooning Market Put the "Wealth Effect" in Reverse?
		If we use the Federal Reserve's annual and quarterly data on household wealth and its components to gauge wealth effects and their likely impact on spending, the relative magnitudes of the wealth gains of the 1994-99 period vs. the "pause" in wealth gains in 2000 can be readily seen.
		The reason for the big discrepancy between growth in household wealth and the gain in direct stock holdings since 1994 is that household wealth is distributed across a broad array of asset categories.
		As of mid-2000, 45% of household wealth was held in the form of tangible assets, deposits at banks, credit-market instruments, life insurance reserves, and miscellaneous assets.
	www.businessweek.com /bwdaily/dnflash/oct2000/nf20001019_394.htm (851 words)

	The Big Picture: Why the Treasury Secretary is Wrong on the Wealth Effect of Stocks vs Real Estate
		What we have been calling a housing wealth effect is just the increased income effect of refinancing, and there is a limit to how many times you can do that trick.
		Oct 26, 2006 10:30:23 AM The relative wealth effects of housing and equities are pretty well understand by reasonable people, at least in directional terms.
		Oct 26, 2006 9:55:50 PM The wealth effect from the current market is likely to rival the wealth effect from the dot com market, hanky.
	bigpicture.typepad.com /comments/2006/10/srocks_versus_r.html (5327 words)

	Congress of California Seniors - Ruhig's Senior Focus - The Wealth Effect vs. the Poverty Effect
		The king's fortune is old oil wealth, as opposed to new "paper" wealth being created in the United States by the surging stock market.
		Economists label this the "wealth effect," as the feeling-enriched folks are said to spend 2 percent to 4 percent of their newly sensed wealth the following year.
		The long-term results of a market downturn's instant "poverty effect" would be partially dependent on the reactions of the federal government.
	www.seniors.org /saveenergy.asp?id=575 (663 words)

	Safe Haven \| Where is the 'Negative Wealth Effect?'
		Real estate accounts for almost 70% of assets for those in the 40th wealth percentile and slowly declines to 50% for those at the 80th percentile.
		The study did indicate that there is a lag in the wealth up to several quarters.
		That would indicate that the "negative wealth effect" has been at work for the upper income group and will likely get more pronounced into the second half of the year.
	www.safehaven.com /showarticle.cfm?id=147 (1302 words)

Try your search on: Qwika (all wikis)