Saving Behavior Across the Wealth Distribution: The Importance of Capital Gains

Abstract

and seminar participants at various institutions for useful comments. This paper is part of a research project at Statistics Norway generously funded by the Norwegian Research Council (#287720). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

The Transmission of Monetary Policy under the Microscope

“…Household wealth is given by housing wealth, financial net worth, the value of vehicles (boats and cars), and outstanding claims (private loans and receivables). We find that the response of total household wealth is almost entirely driven by housing wealth, which is by far the largest component (see also Fagereng, Holm, Moll and Natvik, 2019). Risky assets consist of stock holdings and mutual stock fund holdings.…”

Lifecycle Patterns of Saving and Wealth Accumulation

“…2018) andFagerang, Holm, Moll, and Natvik (2018). Both of those papers struggle with the exact same problem raised here.…”

“…Consistent with recent studies using administrative registries for other industrial economies, the pseudo-panel wealth change accounting framework presented here focuses attention on the role of asset prices and heterogeneity in rates of return to capital when considering differences in saving over the lifecycle and across time. For example, Bach, Calvet, and Sodini (2018) and Fagerang, Holm, Moll, and Natvik (2018) show that the accounting treatment and estimates of the capital gains component of wealth change is key for interpreting the extent to which differences in savings behavior per se versus heterogeneity in (say) income processes is the key to understanding wealth inequality. 3 We are able to show the same basic relationships at the agent-type level in the U.S. using the pseudo-panel approach.…”

Monetary Policy, Redistribution, and Risk Premia

“…44 SeeTable 8ofFagereng et al (2019b) andFigure 3ofBriggs et al (2015).45 Using the Panel Study of Income Dynamics,Brunnermeier and Nagel (2008) document significant inertia in financial portfolios, with a negative change in the risky share after receiving one dollar of cash or deposits but an increase in the risky share after receiving one dollar of unexpected returns on risky assets. In recent work,Fagereng, Holm, Moll, and Natvik (2019a) also find evidence that households "save by holding" on to nearly 100% of assets experiencing capital gains.…”