Wealth Effects on Consumption in Malta: Evidence from Household Level Data | Zendy

Ilias Georgakopoulos | Zendy

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Wealth Effects on Consumption in Malta: Evidence from Household Level Data

Author(s) -

Ilias Georgakopoulos

Publication year - 2019

Publication title -

applied economics and finance

Language(s) - English

Resource type - Journals

eISSN - 2332-7308

pISSN - 2332-7294

DOI - 10.11114/aef.v6i4.4315

Subject(s) - consumption (sociology) , consumption function , economics , wealth effect , autonomous consumption , sample (material) , estimation , demographic economics , consumer expenditure survey , ordinary least squares , survey data collection , consumer spending , econometrics , labour economics , public economics , microeconomics , monetary economics , production (economics) , macroeconomics , statistics , mathematics , social science , sociology , recession , monetary policy , chemistry , aggregate expenditure , management , chromatography

This paper attempts to examine for the first time the effects of household wealth on consumption in Malta, based on household level data from the 2017 Household Finance and Consumption Survey (HFCS). The estimation of the log-log consumption function is performed using OLS regression, after taking into account the survey design. The results provide evidence in support of the existence of a wealth effect on consumption, stemming from housing and financial wealth. In particular, the housing wealth effect on consumption is positive and higher than the financial wealth effect for the whole sample size, especially for homeowners. In addition, comparisons in the differences in wealth effects across age groups confirm the existence of a life-cycle pattern in consumption.

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