Explaining the recent dynamics of the saving rate in the euro area: evidence from the Consumer Expectations Survey

Guido Bulligan () and Paolo Farroni ()
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Guido Bulligan: Bank of Italy
Paolo Farroni: Bank of Italy

No 1046, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We examine the post-COVID relationship between household-level income uncertainty and consumption-saving behaviour, using granular data from the ECB Consumer Expectations Survey (CES). We find that higher uncertainty is associated with higher saving rates and lower nominal consumption, with stronger responses among lower-income and liquidity-constrained households. By decomposing uncertainty into downside and upside components, we show that most of the effect is driven by downside risk. At country level, aggregated income uncertainty provides some information beyond the traditional determinants of national saving rates, although its contribution to improving macro-model point forecast accuracy is limited.

Keywords: uncertainty; income risk; saving rate; household expectations; liquidity constraints; macroeconomic forecasting (search for similar items in EconPapers)
JEL-codes: D12 D84 D91 E21 (search for similar items in EconPapers)
Date: 2026-07
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_1046_26

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