TY  - RPRT
        AU  - Maggio, Marco Di
AU  - Kermani, Amir
AU  - Majlesi, Kaveh
        TI  - Stock Market Returns and Consumption
        PY  - 2018/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 11357
        UR  - https://www.iza.org/index.php/publications/dp11357
        AB  - This paper employs Swedish data on households' stock holdings to investigate how consumption responds to changes in stock market returns. We instrument the actual capital gains and dividend payments with past portfolio weights. Unrealized capital gains lead to a marginal propensity to consume (MPC) of 13 percent for the bottom 50% of the wealth distribution, but a flat 5 percent for the rest of the distribution. Households' consumption is significantly more responsive to dividend payouts across all parts of the wealth distribution. Our findings are consistent with households treating capital gains and dividends as separate sources of income.
        KW  - consumption
KW  - dividend income
KW  - capital gain
KW  - near-rational behavior
        ER  -