Marginal propensity to consume from assets in share form

Indicator showing how many cents private households spend more/less if their equity assets increase/decrease by USD 1 (EUR 1). – In 2002, this figure was around 0.05 in the USA and 0.01 in Europe. This means that consumer spending in the USA increases/decreases by 5 cents, whereas in Europe it increases/decreases by 1 cent, if equity assets increase/decrease by USD 1 or EUR 1. It is debatable to what extent such historical experience values can be extrapolated for the future. This is because it has been proven that investment behavior is also very strongly determined by the current economic climate and expectations. – See orientation, share price-determined, savings rate. – Cf. ECB Monthly Bulletin, September 2002, p. 30 ff (presentation with overviews).

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