Individual consumption and saving decisions are integral to aggregate economic growth, demonstrated in economic theories such as the exogenous growth model. Behavioral economists have posited that a “wealth effect” plays a factor in individual consumption patterns. In this paper, I use the 1999-2007 cohorts of the Panel Survey of Income Dynamics to explore evidence of a wealth effect in stock equity and fixed income. Using panel data estimation techniques, I find no evidence of a wealth effect stemming from equity or fixed income gains among individuals with concentrated financial wealth.
Boldt, Jason K.
"The Wealth Effect In Equity And Fixed Income,"
Undergraduate Economic Review:
1, Article 18.
Available at: http://digitalcommons.iwu.edu/uer/vol7/iss1/18