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Household saving rates in the EU: Why do they differ so much?

Author

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  • Michael H. Stierle
  • Stijn Rocher

Abstract

This paper investigates factors which may help explain the persistent differences in household saving rate across the EU, which in 2013 ranged from –10% of household income in Romania to +16% in Germany. Factors explaining changes over time or forecasting of household savings fall out of the scope of this paper. First, we argue that caution is needed when comparing household saving rates across countries. Institutional differences and data reliability are likely to hinder the international comparability of saving rates. Second, we discuss various determinants of household saving behaviour. We find that traditional explanatory variables like income levels, age dependency and uncertainty can explain more than half of the cross section variance in saving rates. However, large unobserved country fixed effects (e.g. because of institutional differences and measurement error) appear to be present.

Suggested Citation

  • Michael H. Stierle & Stijn Rocher, 2015. "Household saving rates in the EU: Why do they differ so much?," European Economy - Discussion Papers 005, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:005
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    Cited by:

    1. Ivana Rukavina, 2022. "Evaluation of macroeconomic outcomes and the seven-year membership of Croatia in the European Union," Public Sector Economics, Institute of Public Finance, vol. 46(1), pages 1-42.
    2. Pirmin Fessler & Martin Schürz, 2017. "Zur Verteilung der Sparquoten in Österreich," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 13-33.
    3. Marcinkiewicz Edyta, 2017. "Factors Affecting the Development of Voluntary Pension Schemes in CEE Countries: A Panel Data Analysis," Central European Economic Journal, Sciendo, vol. 3(50), pages 26-40, December.
    4. Marina Malkina, 2019. "Determinants of Private Savings in the Form of Bank Deposits: A Case Study on Regions of the Russian Federation," Economies, MDPI, vol. 7(2), pages 1-22, June.
    5. Oinonena, Sami & Virén, Matti E. E., 2022. "Has there been a change in household saving behavior in the low inflation and interest rate environment?," BoF Economics Review 3/2022, Bank of Finland.
    6. Abigail McKnight & Mark Rucci, 2020. "The financial resilience of households: 22 country study with new estimates, breakdowns by household characteristics and a review of policy options," CASE Papers /219, Centre for Analysis of Social Exclusion, LSE.
    7. Artemis Stratopoulou, 2023. "Assessing the Effects of Capital Account Liberalization on Savings," Open Economies Review, Springer, vol. 34(5), pages 1107-1170, November.
    8. Ana Skoblar, 2024. "The puzzle of household savings in the European Union: tracing influences across time and space," Public Sector Economics, Institute of Public Finance, vol. 48(3), pages 247-282.
    9. François Facchini & Sophie Massin & Kevin Brookes, 2024. "The relationship between institutional quality, trust and private savings," Post-Print hal-04379761, HAL.
    10. repec:ers:journl:v:xxiv:y:2021:i:3:p:874-898 is not listed on IDEAS
    11. Philemon Kwame Opoku, 2019. "The Short-Run and Long-Run Determinants of Household Saving:Evidence from OECD countries," Working Papers REM 2019/0110, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    12. Bernard Bawuah, 2025. "The behavioral effects of economic agents on consumption and savings after currency reform: evidence from Ghana’s redenomination policy adaptation," SN Business & Economics, Springer, vol. 5(2), pages 1-23, February.
    13. Philemon Kwame Opoku, 0. "The Short-Run and Long-Run Determinants of Household Saving: Evidence from OECD Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 0, pages 1-35.
    14. Andrius Kučas & Boyan Kavalov & Carlo Lavalle, 2020. "Living Cost Gap in the European Union Member States," Sustainability, MDPI, vol. 12(21), pages 1-26, October.
    15. Domenica Federico & Antonella Notte & Angela Coscarelli & Maria Anastasia Arcuri, 2024. "Determinants of Household Saving Using Linear Regression Model. Evidence in Italian Regions," American Journal of Economics and Business Administration, Science Publications, vol. 16(1), pages 1-14, April.
    16. Willem Vanlaer & Samantha Bielen & Wim Marneffe, 2020. "Consumer Confidence and Household Saving Behaviors: A Cross-Country Empirical Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(2), pages 677-721, January.
    17. Simeon Coleman & Juan Carlos Cuestas, 2023. "Has the current account broken up with its fundamentals in Central and Eastern Europe?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 962-980, January.
    18. 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.
    19. Aneta Kłopocka, 2018. "Skłonność gospodarstw domowych do oszczędzania a wiedza finansowa," Bank i Kredyt, Narodowy Bank Polski, vol. 49(5), pages 461-492.
    20. 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 - Part ), pages 874-898.
    21. Philemon Kwame Opoku, 2020. "The Short-Run and Long-Run Determinants of Household Saving: Evidence from OECD Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(3), pages 430-464, September.
    22. Edouard Augustin Ribes, 2023. "Transforming personal finance thanks to artificial intelligence: myth or reality?," Financial Economics Letters, Anser Press, vol. 2(1), pages 11-12, April.

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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