Using a panel of 16 emerging markets, the paper finds a small but statistically significant effect of stock market developments on private consumption spending. In the short run, a 10 percent decline in the annual real stock market return is associated with a reduction in real private consumption by around 0.1-0.3 percent on average. There is evidence that the link between stock market fluctuations and private consumption has become stronger during the 1990s as stock markets in emerging economies have broadened and deepened. However, there is no significant evidence that the influence is asymmetric. Stock price declines do not have a different impact on consumption than stock price increases.There is also evidence that the wealth effect differs with the type of stock market investments. ... The analysis includes all emerging markets for which private consumption data and stock market returns are available at least since the secondanbsp;...
|Title||:||Stock Market Developments and Private Consumer Spending in Emerging Markets|
|Publisher||:||International Monetary Fund - 2002-12-01|