The Wealth Effect in the Eurozone

Óscar Rodil-Marzábal () and Vicente Menezes-Ferreira-Junior ()

Panoeconomicus, 2016, vol. 63, issue 1, 87-112

Abstract: The recent global financial crisis represents a serious threat to the growth of economies. This crisis deeply affects the real economy through a phenomenon known as the wealth effect, which assumes that a fall in wealth leads to a reduction of private consumption. Thus, this paper analyzes the wealth effect on consumption using quarterly macro-data for 10 Eurozone countries in the period 2000-2010. The results suggest the existence of a positive and significant wealth effect on consumption with the predominance of a financial effect on housing, showing larger consumption sensitivity to changes in the value of financial assets. Key words: Wealth, Consumption, Crisis, Eurozone.JEL: E21, G01, O52.

Keywords: Wealth; Consumption; Crisis; Eurozone (search for similar items in EconPapers)
Date: 2016
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