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Savings and investment behaviour in the euro area

Author

Listed:
  • Rodriguez-Palenzuela, Diego
  • Dées, Stéphane
  • Andersson, Malin
  • Bijsterbosch, Martin
  • Forster, Katrin
  • Zorell, Nico
  • Audoly, Richard
  • Buelens, Christian
  • Compeyron, Guillaume
  • Ferrando, Annalisa
  • Felt, Marie-Hélène
  • Jaccard, Ivan
  • Morris, Richard
  • Özyurt, Selin
  • Radde, Sören
  • Rusinova, Desislava
  • Saiz, Lorena
  • Piette, Cristophe
  • Van Nieuwenhuyze, Christophe
  • Nagengast, Arne J.
  • Raudsaar, Taavi
  • Malk, Liina
  • Everett, Mary
  • Catiforis, Christos
  • Panagiotou, Stelios
  • Urtasun, Alberto
  • Burker, Matthias
  • Vicard, Vincent
  • Scoccianti, Filippo
  • Papageorghiou, Maria
  • Bluzma, Osvalds
  • Di Filippo, Gabriele
  • Porpiglia, Alessandro
  • Gatt, William
  • Öztürk, Bahar
  • Perridon, Anneli
  • Albacete, Nicolás
  • Costa, Sonia
  • Silva, Nuno
  • Herman, Uroš
  • Zorko, Robert
  • Strachotova, Anna
  • Gulan, Adam

Abstract

Although monetary union created the conditions for improving economic and financial integration in the euro area, in the context of the financial and sovereign crises, it has also been accompanied by the emergence of severe imbalances in savings and investment, credit and housing booms in some countries and the allocation of resources towards less productive sectors. The global financial crisis and the euro area sovereign debt crisis then led to major and abrupt adjustments as the risks posed by the large imbalances materialised. Although the institutional shortcomings in the EU that permitted the emergence of imbalances have been largely addressed since 2008, the adjustment process is not yet complete. From a macroeconomic perspective, the imbalances in the external accounts have led to the accumulation of high levels of external liabilities that need to be reduced, which, in turn, is weakening investment and therefore weighing on growth prospects and growth potential. From a macroprudential perspective, the lingering imbalances have added to systemic risk and rendered the euro area more vulnerable to risks. This Occasional Paper analyses the dynamic patterns in macroeconomic imbalances primarily from the former perspective, addressing in particular the connections between macroeconomic and sectoral adjustments of imbalances and the challenges for economic growth and performance over a longer horizon. JEL Classification: E21, E22, F32, F41

Suggested Citation

  • Rodriguez-Palenzuela, Diego & Dées, Stéphane & Andersson, Malin & Bijsterbosch, Martin & Forster, Katrin & Zorell, Nico & Audoly, Richard & Buelens, Christian & Compeyron, Guillaume & Ferrando, Annali, 2016. "Savings and investment behaviour in the euro area," Occasional Paper Series 167, European Central Bank.
  • Handle: RePEc:ecb:ecbops:2016167
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpops/ecbop167.en.pdf
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    Cited by:

    1. World Bank, 2017. "Demystifying Forest Bonds," World Bank Other Operational Studies 28587, The World Bank.
    2. Brunella Bruno & Alexandra D’Onofrio & Immacolata Marino, 2017. "Financial Frictions and Corporate Investment in Bad Times. Who Cut Back Most?," CSEF Working Papers 463, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 02 May 2017.
    3. repec:cog:socinc:v:5:y:2017:i:4:p:38-47 is not listed on IDEAS
    4. repec:mes:emfitr:v:53:y:2017:i:11:p:2585-2608 is not listed on IDEAS
    5. Ana Martinis & Igor Ljubaj, 2017. "Corporate Debt Overhang in Croatia: Micro Assessment and Macro Implications," Working Papers 51, The Croatian National Bank, Croatia.
    6. Yuichiro Ito & Yasutaka Takizuka & Shigeaki Fujiwara, 2017. "Portfolio Selection by Households: An Empirical Analysis Using Dynamic Panel Data Models," Bank of Japan Working Paper Series 17-E-6, Bank of Japan.

    More about this item

    Keywords

    consumption; current account; investment; rebalancing; savings;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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