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Household Wealth and Resilience to Financial Shocks in Italy

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  • Daniel Garcia-Macia

    (International Monetary Fund)

Abstract

Financial shocks in a sector of the economy transmit to other sectors via financial linkages. This paper constructs the matrix of bilateral financial sectoral exposures in Italy over the last two decades. Using this information, it develops a method to simulate how each sector absorbs plausible financial shocks. A fall in the value of government bonds directly affects banks and indirectly affects households via equity holdings in banks. A bank bail-in is absorbed by foreigners and by households, particularly those at the top of the wealth distribution. Conversely, in a bank bailout these two groups benefit from a government transfer.

Suggested Citation

  • Daniel Garcia-Macia, 2021. "Household Wealth and Resilience to Financial Shocks in Italy," International Journal of Central Banking, International Journal of Central Banking, vol. 17(3), pages 241-272, September.
    • Handle: RePEc:ijc:ijcjou:y:2021:q:3:a:6
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    Cited by:

    1. Jonathan Spiteri & Philip Brockdorff, 2023. "Household Wealth and Inheritance Transfers: Evidence from the Euro Area," Journal of Family and Economic Issues, Springer, vol. 44(3), pages 619-633, September.

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    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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