Differences in euro-area household finances and their relevance for monetary-policy transmission

This paper quantifies the extent of heterogeneity in consumption responses to changes in real interest rates and house prices in the four largest economies in the euro area: France, Germany, Italy, and Spain. We first ca
This paper quantifies the extent of heterogeneity in consumption responses to changes in real interest rates and house prices in the four largest economies in the euro area: France, Germany, Italy, and Spain. We first calibrate a life-cycle incomplete-markets model with a financial asset and housing to match the large heterogeneity of households asset portfolios, observed in the Household Finance and Consumption Survey (HFCS) for these countries. We then show that the heterogeneity in household finances implies that responses of consumption to changes in the real interest rate and in house prices differ substantially across countries, and within countries by household characteristics such as age, housing tenure, and asset positions. The different consumption responses quantified in this paper point towards important heterogeneity in monetary-policy transmission in the euro area.
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Metadaten
Author:Thomas Hintermaier, Winfried Koeniger
URN:urn:nbn:de:hebis:30:3-518158
URL:https://ssrn.com/abstract=3496302
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 637
Series (Serial Number):CFS working paper series (637)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Language:English
Year of Completion:2019
Year of first Publication:2019
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2019/12/02
Tag:European household portfolios; consumption; housing; international comparative finance; monetary policy transmission
Issue:November 1, 2019
Pagenumber:63
HeBIS PPN:457511079
Institutes:Wirtschaftswissenschaften
Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:D14 Personal Finance
D31 Personal Income, Wealth, and Their Distributions
E21 Consumption; Saving; Wealth
E43 Determination of Interest Rates; Term Structure of Interest Rates
G11 Portfolio Choice; Investment Decisions
D15
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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