Where can we see wealth effects linked to the crisis?

- "In theory, household spending (their savings rate and housing investment) is linked to their property and financial wealth; corporate investment is linked to companies’ market capitalisation."
- "We seek to ascertain where these wealth effects are most visible, and what they imply for the future."
- "With regard to households, we can see that wealth has a significant effect on spending in the United States, the United Kingdom, France, Italy and Spain, but not at all in Germany."
- "With regard to companies, we find in all countries (albeit less markedly in the United Kingdom) a significant effect of market capitalisation on productive investment."
- "Stock markets are rather sluggish and residential property prices are on the rise again in the United States, the United Kingdom, France and Italy - but slowly, and property wealth remains depressed."
- "Wealth effects will therefore continue to stifle demand, except in the case of German household demand."

Natixis Flash Economics 404 20100823

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