01741cas a2200241 a 4500 AALejournalIMF008937 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451862904 1018-5941 BD-DhAAL BD-DhAAL Munoz, Sonia. Wealth Effects in Europe : A Tale of Two Countries (Italy and the United Kingdom) / Sonia Munoz. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (53 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper investigates the increasing exposure of European households to risky financial assets and the consequent impact on the economy. I analyze household data for Italy and the United Kingdom, countries that differ dramatically in their financial structure and capital markets. I estimate an endogenous switching model with bivariate switching to overcome two important obstacles in this line of research, namely, the consumption Capital Asset Pricing Model Puzzle and the excess sensitivity puzzle. The results show that there are wealth effects in both countries. I find some evidence of liquidity constraints only in Italy and habit formation exclusively in the United Kingdom. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2006/030 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/030/001.2006.issue-030-en.xml IMF e-Library