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Investment choice and asset allocation of Italian households: the discrete-continuous approach

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  • Matteo Ricciarelli

Abstract

Financial and monetary policies are considered to be effective depending on the reaction of financial markets which are increasingly populated by households. In this article, from intertemporal settings, I derive a Financial Almost Ideal (FAI) Demand System and I estimate it by highlighting the determinants of both limited participation to financial markets and asset substitutability/complementarity in the allocating stage. Finally, the wealth elasticities provide some further insights on the low diffusion of the newer and more complex financial instruments across Italian households.

Suggested Citation

  • Matteo Ricciarelli, 2009. "Investment choice and asset allocation of Italian households: the discrete-continuous approach," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 651-662.
    • Handle: RePEc:taf:applec:v:43:y:2009:i:6:p:651-662
    DOI: 10.1080/00036840802599800
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    References listed on IDEAS

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    1. Annette Vissing-Jorgensen, 2000. "Towards an Explanation of Household Portfolio Choice Heterogeneity: Nonfinancial Income and Participation Cost Structures," Econometric Society World Congress 2000 Contributed Papers 1102, Econometric Society.
    2. Bunch, David S. & Kitamura, Ryuichi, 1991. "Probit Model Estimation Revisited: Trinomial Models of Household Car Ownership," University of California Transportation Center, Working Papers qt2hr8d4bs, University of California Transportation Center.
    3. Blake, David, 2003. "Modelling the composition of personal sector wealth in the United Kingdom," LSE Research Online Documents on Economics 24866, London School of Economics and Political Science, LSE Library.
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