Wealth effects in emerging market economies

Article history: Received 24 June 2010 Received in revised form 17 January 2012 Accepted 19 January 2012 Available online 27 January 2012 We build a panel of 14 emerging economies to estimate the magnitude of wealth effects on consumption. Usingmodern econometric techniques and quarterly data,we show that: (i)wealth effects are statistically significant and relatively large inmagnitude; (ii) stockmarket and housing wealth effects are, generally, smaller for Latin American emerging markets; and (iii) housing wealth effects have substantially increased for Asian emerging economies in recent years. Additionally, while housing wealth effects are more important in countries with low level of financial development or low income level, financial wealth effects are stronger for countries with high stock market capitalization. © 2012 Elsevier Inc. All rights reserved. JEL classification: E21 E44 D12