MEASURING THE STOCK OF CONSUMER DURABLES AND ITS IMPLICATIONS FOR EURO AREA SAVINGS RATIOS

Jukka Jalava () and Ilja Kristian Kavonius

Review of Income and Wealth, 2009, vol. 55, issue 1, 43-56

Abstract: The purpose of this article is to estimate the impact of capitalizing 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 two are compiled by considering them to be household final consumption expenditure. We find that the effect of capitalizing consumer durables on EA saving ratios is moderate. The impact is lower than it is in the U.S.

Date: 2009
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