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Wealth and portfolio consumption: theory and evidence

Leape, Jonathan and King, M. A. (1998) Wealth and portfolio consumption: theory and evidence. Journal of Public Economics, 69 (2). pp. 155-193. ISSN 0047-2727

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Abstract

We examine a survey of 6010 U.S. households and estimate a model for household portfolio allocation. We extend the conventional portfolio choice model in order to capture the observed incompleteness of household portfolios. We show that the empirical specification of the joint discrete and continuous choice that characterizes household portfolio behavior is a switching regressions model with endogenous switching. We go on to examine the impact of taxes on portfolio composition, using detailed survey data to calculate precisely the marginal tax rate facing each household. Finally, we estimate wealth elasticities of demand for a range of assets and liabilities.

Item Type: Article
Official URL: http://www.elsevier.com/
Additional Information: © 1998 Elsevier
Library of Congress subject classification: H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice; Investment Decisions
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household
Sets: Collections > Economists Online
Departments > Economics
Research centres and groups > Centre for Research into Economics and Finance in Southern Africa (CREFSA)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 06 Jun 2008 16:41
URL: http://eprints.lse.ac.uk/5463/

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