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Policy Options for European Household Saving

Author

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  • Bouyon, Sylvain

    (Centre for European Policy Studies (CEPS))

Abstract

The purpose of this paper is to monitor the household saving to conduct appropriate macroeconomic policies aiming at a balanced economic recovery in the EU-15. Taking saving rates approach, which places emphasis on the household saving to disposable income ratios, consistently significant β-convergence was observed since 2007 in the European Union, indicating that the need for balance sheet repair was stronger for countries with low pre-crisis saving rates. The absence of correlation between saving ratios and different types of saving yields suggests the poor transmission of monetary policies in the trade-off between consumption and saving. Households seem to disregard interest rates and inflation when they decide on consumption and saving plans. Conversely, the results confirm the prominent role played by the precautionary motives during the financial crisis of 2008~2009, which is reflected in the strong impact of unemployment rates and housing prices. In order to monitor household saving, regulators should place further focus on financial education and should remain vigilant regarding unemployment and housing price developments. To a certain extent, policies that are better aligned at European level to monitor household saving should contribute to converging saving ratios, hereby reinforcing macroeconomic stability and integration in the European Union.

Suggested Citation

  • Bouyon, Sylvain, 2016. "Policy Options for European Household Saving," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 31(1), pages 134-165.
    • Handle: RePEc:ris:integr:0681
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    Citations

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    Cited by:

    1. Aneta M. Klopocka & Rumiana Gorska, 2021. "Forecasting Household Saving Rate with Consumer Confidence Indicator and its Components: Panel Data Analysis of 14 European Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 874-898.
    2. Cristina Badarau & Florence Huart & Ibrahima Sangaré, 2021. "Households saving and financial spillovers in the Euro area," Bulletin of Economic Research, Wiley Blackwell, vol. 73(4), pages 660-687, October.
    3. Wang, Dong & Zhang, Qiqi & Yang, Jingya, 2022. "Higher education expansion and national savings level: Evidence from macro data," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 92-103.
    4. Elvira NICA & Gheorghe H. POPESCU & Adina Teodora PAÅžA, 2020. "Public Policies On Economic Education," Proceedings of Administration and Public Management International Conference, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 16(1), pages 19-24, October.
    5. Aneta Maria Kłopocka & Ryszard Wilczyński, 2021. "Do Credit Supply and Unemployment Risk Matter for Household Saving? Evidence from Poland," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 15(4), December.

    More about this item

    Keywords

    Saving to Disposable Income Ratios; Saving Motives; Convergence Processes;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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