Re: Does Debt Matter

[Charles Anderson <chasna@xxxxxxxxxxx>]

Per Gunnar Berglund wrote:
>
> Per:
>
> [I should add here that my own investigations into the Swedish case show
> that wealth works fine as the ONLY economic factor (aside age structure of
> population etc) in explaining consumption -- provided wealth is factored
> into a volume and a price-level component. Adding flow variables like
> non-property disposable income does not add any explanatory power to the
> regressions. Indeed, the coefficient for disposable income (roughly 0.3 --
> the "marginal propensity to consume") indicate that there is in fact NO
> CAUSAL RELATION going from disposable income to consumption. This is so
> because the households' wealth is roughly 3 x annual consumption, and since
> annual data has been used, the effects of wealth changes WITHIN each year
> would account for this disposable income effect.]
>
Chas writes:

Per, interesting approach. Could you give an example of how you would
incorporate the demographic (age structure) variable alongside the
wealth variable in your consumption function?

Thanks,

Chas