We use panel data at the household level on a complete inventory of household spending and assets to estimate the spending response to the sharp and largely unexpected declines in house and stock market prices that occurred in the Great Recession. Our data span the period 2001-2011, so that we are able to separate trends in spending from innovations in response to unexpected wealth change. We find the marginal propensity to consume out of an unexpected housing wealth change to be seven cents per dollar, and about four cents per dollar out of financial wealth.
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