The deposit financing gap: Another Dutch disease

Huub Meijers, J. Muysken () and Olaf Sleijpen ()
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J. Muysken: SBE, Maastricht University

No 2014-071, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: In the last two decades the Netherlands have experienced an increase in real-estate prices, accompanied by an increase in mortgages and a marked decline in household savings. As a consequence banks are faced with a large retail funding gap as outstanding mortgage debt is insufficiently matched by retail deposits, whereas other funding possibilities of banks have increasingly been constrained - also due to their large foreign exposures. In this paper we argue that traditional macroeconomic models cannot analyse this phenomenon appropriately since they lack a proper model of the financial sector and underestimate the potential for interactions between the monetary and the real sphere. We present a stock-flow consistent approach developed by Godley and Lavoie as a valuable alternative to traditional and new Keynesian macroeconomic models and we use this approach to analyse the deposit financing gap for the Netherlands.

Keywords: Real-estate prices; Mortgages; Household savings; Retail funding gap; Macroeconomic models; Stock-flow consistent approach; Netherlands (search for similar items in EconPapers)
JEL-codes: B50 E44 E60 G21 (search for similar items in EconPapers)
Date: 2014-07-31
New Economics Papers: this item is included in nep-hme, nep-mac and nep-pke
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Journal Article: The deposit financing gap: another Dutch disease (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2014071

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