Household Wealth and Resilience to Financial Shocks in Italy

Author/Editor:

Daniel Garcia-Macia

Publication Date:

August 31, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

High household wealth is often cited as a key strength of the Italian economy. Both in absolute terms and relative to income, the Italian household sector is wealthier than most euro area peers. A sizable fraction of this wealth is held by the rich and upper middle classes. This paper documents the changes in the Italian household sector’s financial wealth over the past two decades, by constructing the matrix of bilateral financial sectoral exposures. Households became increasingly exposed to the financial sector, which in turn was exposed to the highly indebted real and government sectors. The paper then simulates different financial shocks to gauge the ability of the household sector to absorb losses. Simple illustrative calculations are presented for a fall in the value of government bonds as well as for bank bail-ins versus bailouts.

Series:

Working Paper No. 18/196

English

Publication Date:

August 31, 2018

ISBN/ISSN:

9781484374894/1018-5941

Stock No:

WPIEA2018196

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

25

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