Durable goods and their effect on household saving rations in the euro area

Jukka Jalava () and Ilja Kristian Kavonius ()

No 755, Working Paper Series from European Central Bank

Abstract: The purpose of this paper is to estimate the impact of capitalising durable goods on the Euro area household saving ratios and disposable incomes for the first time. The reason for this exercise is twofold. Firstly, it is generally accepted that individual households regard consumer durables as assets even though they are not treated as such in the System of National Accounts 1993. Secondly, the issue is related to the definition of household saving ratios. For instance, the U.S. Federal Reserve Board publishes three household saving measures. The main difference between these saving ratios is that one is derived by treating expenditure on consumer durables as investments while the other ones are compiled by considering them to be household final consumption expenditure. We find that the effect of capitalising consumer durables on EA saving ratios is moderate. The impact is lower than it is in the US. JEL Classification: E21, E22.

Keywords: durable good; asset; saving ratio; disposable income; user cost. (search for similar items in EconPapers)
Date: 2007-05
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