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A Short Note on Interest Rates and Household Wealth

Author

Listed:
  • Riccardo Bonis

    (Bank of Italy, Directorate General For Consumer Protection and Financial Education)

  • Marco Marinucci

    (Bank of Italy, Directorate General For Consumer Protection and Financial Education)

Abstract

The recent prevalence of low interest rates has raised concerns for the consequences of expansionary monetary policies on household wealth. We analyze the link between interest rates and household wealth by taking into account eight rich countries— Canada, France, Germany, Italy, Japan, Spain, the UK and the USA— from 1980 to 2017. We find a negative association between interest rates and the different forms of household wealth, namely real and financial assets. Our results are robust when we include other control variables that might influence household wealth such as saving propensity, GDP per capita, and the ratio of public debt to GDP.

Suggested Citation

  • Riccardo Bonis & Marco Marinucci, 2023. "A Short Note on Interest Rates and Household Wealth," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 617-635, July.
    • Handle: RePEc:spr:italej:v:9:y:2023:i:2:d:10.1007_s40797-022-00194-3
    DOI: 10.1007/s40797-022-00194-3
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    Cited by:

    1. Muellbauer, John & De Bonis, Riccardo & Liberati, Danilo & Rondinelli, Concetta, 2023. "Why net worth is the wrong concept for explaining consumption: evidence from Italy," INET Oxford Working Papers 2023-27, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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    More about this item

    Keywords

    Interest rates; Household wealth and debt;

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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