Stock Market Wealth and the Real Economy: A Local Labor Market Approach

We provide evidence of the stock market consumption wealth effect by using a local labor analysis. An increase in driven aggregate prices increases employment and payroll nontradable industries total, with no on tradable industries. In model geographic heterogeneity wealth, these responses imply an MPC 3.2 cents per year that 20 percent valuations, unless countered monetary policy, bill at least 1.7 hours 0.7 two years after shock. (JEL E21, E24, E52, G12, G51, R22, R23 )