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Explaining the recent dynamics of the saving rate in the euro area: evidence from the Consumer Expectations Survey

Author

Listed:
  • Guido Bulligan

    (Bank of Italy)

  • Paolo Farroni

    (Bank of Italy)

Abstract

We examine the post-COVID relationship between household-level income uncertainty and consumption-saving behaviour, using granular data from the ECB Consumer Expectations Survey (CES). We find that higher uncertainty is associated with higher saving rates and lower nominal consumption, with stronger responses among lower-income and liquidity-constrained households. By decomposing uncertainty into downside and upside components, we show that most of the effect is driven by downside risk. At country level, aggregated income uncertainty provides some information beyond the traditional determinants of national saving rates, although its contribution to improving macro-model point forecast accuracy is limited.

Suggested Citation

  • Guido Bulligan & Paolo Farroni, 2026. "Explaining the recent dynamics of the saving rate in the euro area: evidence from the Consumer Expectations Survey," Questioni di Economia e Finanza (Occasional Papers) 1046, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_1046_26
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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