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The Wealth Effect in the Eurozone

Author

Listed:
  • Óscar Rodil-Marzábal

    () (The Wealth Effect in the Eurozone Department of Applied Economics, University of Santiago de Compostela, Spain)

  • Vicente Menezes-Ferreira-Junior

    () (Banco Central do Brasil, Brazil)

Abstract

The recent global financial crisis represents a serious threat to the growth of economies. This crisis deeply affects the real economy through a phenomenon known as the wealth effect, which assumes that a fall in wealth leads to a reduction of private consumption. Thus, this paper analyzes the wealth effect on consumption using quarterly macro-data for 10 Eurozone countries in the period 2000-2010. The results suggest the existence of a posi- tive and significant wealth effect on consumption with the predominance of a financial effect on housing, showing larger consumption sensitivity to changes in the value of financial assets.

Suggested Citation

  • Óscar Rodil-Marzábal & Vicente Menezes-Ferreira-Junior, 2016. "The Wealth Effect in the Eurozone," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(1), pages 87-112, March.
    • Handle: RePEc:voj:journl:v:63:y:2016:i:1:p:87-112
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    References listed on IDEAS

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    Cited by:

    1. de Bondt, Gabe & Gieseck, Arne & Zekaite, Zivile & Herrero, Pablo, 2019. "Disaggregate income and wealth effects in the largest euro area countries," Working Paper Series 2343, European Central Bank.
    2. Gabe Jacob de Bondt & Arne Gieseck & Zivile Zekaite, 2020. "Thick modelling income and wealth effects: a forecast application to euro area private consumption," Empirical Economics, Springer, vol. 58(1), pages 257-286, January.
    3. Konstantina Manou & Panagiotis Palaios & Evangelia Papapetrou, 2019. "Housing wealth, household debt and financial assets: are there implications for consumption?," Working Papers 263, Bank of Greece.

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    More about this item

    Keywords

    Wealth; Consumption; Crisis; Eurozone;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G01 - Financial Economics - - General - - - Financial Crises
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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