Disaggregate income and wealth effects in the largest euro area countries

Gabe de Bondt, Arne Gieseck, Pablo Herrero and Zivile Zekaite
Additional contact information
Arne Gieseck: European Central Bank
Pablo Herrero: European University Institute

No 15/RT/19, Research Technical Papers from Central Bank of Ireland

Abstract: This study extends a thick modelling tool for aggregated euro area real private consumption of de Bondt et al. (2019) to the four largest euro area countries. The suite of error correction models performs well in and out of sample. The ranges and averages of estimated elasticities are, however, sensitive to the exact model specication. We also show that decomposing disposable income into labour, property and transfer income is essential for understanding and forecasting consumption. Finally, substantial cross-country heterogeneity in marginal propensities to consume out of income and wealth components calls for caution when interpreting aggregate euro area developments.

Keywords: private consumption; income; wealth; thick modelling (search for similar items in EconPapers)
JEL-codes: C53 D12 E21 E27 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Disaggregate income and wealth effects in the largest euro area countries (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cbi:wpaper:15/rt/19

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