Household Savings in Selected Southern European Countries Evidence from Cross-Country Micro-Level Data

By Kamil Dybczak, Shiqing Hua, Mariusz Jarmuzek, Ruifeng Zhang, Yipei Zhang

July 21, 2023

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Format: Chicago

Kamil Dybczak, Shiqing Hua, Mariusz Jarmuzek, Ruifeng Zhang, and Yipei Zhang. Household Savings in Selected Southern European Countries Evidence from Cross-Country Micro-Level Data, (USA: International Monetary Fund, 2023) accessed November 8, 2024

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

The paper looks into the puzzle of low household savings in three Southern European (SE3) countries – Cyprus, Greece, and Portugal. Building on the household saving drivers literature, we employ cross-country micro-level data and investigate the key saving patterns, examining their heterogeneity across households in SE3 countries relative to the EA average. The results confirm the prominent role of income, along with interest rate, inflation, fiscal balance, and debt in shaping household savings in SE3 countries. Quantile regressions employed to analyze saving behavior across the distribution of households suggest that households with lower savings tend to see their savings dip (or dissavings rise) more-than-proportionately with shocks to income, interest rate, inflation, and government balance. Our policy simulations across the distribution of households suggest that targeted rather than universal policy intervention could improve household savings, especially of the most vulnerable ones.

Subject: Consumption, Disposable income, Income, Income shocks, Inflation, National accounts, Prices

Keywords: Consumption, Disposable income, Distributional analysis, Household saving, Household saving rate, Household savings, Income, Income shocks, Inflation, Inflation shock, Policy simulations, Saving pattern, Southern Europe

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/150
Stock No:

WPIEA2023150
ISBN:

9798400249075
ISSN:

1018-5941

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