No . 55 Asset Holding and Consumption :

* We thank to the Institute of Household Economy (Kakei-Keizai-Kenkyu-Sho) for providing us micro-level data from the Japanese Panel Survey of Consumption. We also thank to participants at the ESRI seminar. The views expressed in this paper are those of authors' and do not necessarily represent those of the Economic and Social Research Institute or of the Japanese Government. Abstract The 1990s crash in Japan's stock and land market should have had adverse effects on household consumption. This paper takes advantage of a panel data from Japanese households to evaluate the impacts of the wealth gains or losses on households' spending. We obtain the following empirical findings. First, stockholders' consumption is responsive to stock market movements while this is not the case for non-stockholders, suggesting the importance of " direct " wealth effects. Second, we compared the marginal propensity to consume (MPC) out of stock price changes and real estate price changes, and found that they are roughly comparable. The MPC out of wealth gains or losses is estimated to be 0.05 to 0.1 slightly higher than estimates reported in previous studies on Japanese consumption using aggregate data.