## A Balance-Sheet Analysis of the Dutch Economy

_IMF Working Papers, October 22, 2021_

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**Canonical URL:** [A Balance-Sheet Analysis of the Dutch Economy](https://www.imf.org/en/publications/wp/issues/2021/10/22/a-balance-sheet-analysis-of-the-dutch-economy-497246)

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## Bibliographic details
- Authors: Ruo Chen
- Published: October 22, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781589068278.001

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### Executive summary
- The Dutch economy is characterized by substantial financial balance sheets in the private sector.
- Uncommonly large gross financial assets and liabilities are found in the financial sector, whereas households own significant net financial wealth.
- The large gross financial assets and liabilities reflect a dominant role of multinational corporations (MNCs).
- Despite their size, these financial positions have not brought significant financial stability risks to the country.
- Dutch households’ long balance sheets have been associated with depressed consumption and volatile real estate investment, which has probably exacerbated the cyclicality of the economy.
- The expected reform of the pension system is likely to change the way household balance sheets interact with private consumption.

### Major findings
- Financial sector: presence of uncommonly large gross financial assets and liabilities.
- Households: significant net financial wealth but long balance sheets associated with:
  - depressed consumption; and
  - volatile real estate investment.
- Multinational corporations: dominant role underlying large gross financial positions.
- Financial stability: large positions have not translated into significant financial stability risks.

### Policy-relevant implications and scenarios
- Pension reform:
  - Expected reform of the pension system is likely to alter interactions between household balance sheets and private consumption.
- Cyclicality:
  - Household balance sheet dynamics (depressed consumption and volatile real estate investment) likely exacerbate economic cyclicality.
- Financial sector monitoring:
  - Continued monitoring of large gross financial assets and liabilities in the financial sector is implied given their scale and MNC roles, despite current limited stability risks.

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_Source: https://www.imf.org/en/publications/wp/issues/2021/10/22/a-balance-sheet-analysis-of-the-dutch-economy-497246_