European Central Bank - eurosystem
Muokkaa hakua
Pääsivu Media Oheistietoa Tutkimus ja julkaisut Tilastot Rahapolitiikka Euro Maksut ja markkinat Ura EKP:sssä
Hakuehdotuksia
Järjestä tulokset
Ei saatavilla suomeksi

Household Finance and Consumption Survey (HFCS) - Research publications

NCB Working Papers using the HFCS

ECB HFCN publications

6 November 2023
WORKING PAPER SERIES - No. 2865
Details
Abstract
The Household Finance and Consumption Survey (HFCS) provides valuable information for the monetary policy and financial stability purposes. The dataset shows, however, inconsistencies with National Account (NtlA) statistics, as the aggregated HFCS micro data do usually not match the corresponding NtlA macro data. Therefore, we suggest a solution to close the gap via an optimization problem that aims at preserving for each wealth instrument the level of inequality measured by the Gini coefficient. In addition, a lower and an upper bound of inequality are derived, that can be reached by extreme allocations of the wealth discrepancies across the households. Finally, based on the German HFCS, we compare the findings with another approach suggested in the literature that uses a “multivariate calibration”. The comparison indicates that the multivariate calibration may reallocate households’ wealth beyond the observed discrepancies, thereby leading to Gini coefficients that exceed the analytically derived upper bound of inequality.
JEL Code
C46 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Specific Distributions, Specific Statistics
C61 : Mathematical and Quantitative Methods→Mathematical Methods, Programming Models, Mathematical and Simulation Modeling→Optimization Techniques, Programming Models, Dynamic Analysis
D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
G51 : Financial Economics
N34 : Economic History→Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy→Europe: 1913-
Network
Household Finance and Consumption Network (HFCN)
20 July 2023
STATISTICS PAPER SERIES - No. 46
Household Finance Consumption Network
    Details
    Abstract
    This report summarises the stylized facts from the fourth wave of the Eurosystem Household Finance and Consumption Survey, which provides household-level data collected in a harmonised way in all 19 euro area countries, as well as in the Czech Republic, Croatia and Hungary for a sample of more than 83,000 households. Although the survey does not refer to the same time period in all countries, the most common reference period for the data is 2021. The report presents results on household assets and liabilities, income, and indicators of consumption and credit constraints
    Network
    Household Finance and Consumption Network (HFCN)
    20 July 2023
    STATISTICS PAPER SERIES - No. 45
    Household Finance Consumption Network
      Details
      Abstract
      This report summarises the methodologies used in the fourth wave of the Eurosystem Household Finance and Consumption Survey, which provides household-level data collected in a harmonised way in all 19 euro area countries, as well as in the Czech Republic, Croatia and Hungary. The total sample size is composed of more than 83,000 households. Although the survey does not refer to the same time period in all countries, the most common reference period for the data is 2021. The report presents the methodologies applied in areas such as data collection, sample design, weighting, imputation, and variance estimation. It also addresses statistical disclosure control issues and analyses issues that may have an effect on the comparability of the survey data across countries and across waves.
      Network
      Household Finance and Consumption Network (HFCN)
      2 October 2020
      WORKING PAPER SERIES - No. 2474
      Details
      Abstract
      Using a dedicated set of questions in the 2014 Luxembourg Household Finance and Consumption Survey (LU-HFCS), we show that a substantial share of households contributes their own labour to the acquisition of their main residence. These contributions help households faced with credit constraints, since they reduce the need for external financing. We develop a simple theoretical model and show that own labour contributions decrease with the level of financial resources available, while they increase with the mortgage interest rate. These theoretical results are supported by empirical analysis, which also shows that own labour contributions vary by household characteristics (age, gender, profession) and by type of dwelling (house, apartment).
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      R21 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Housing Demand
      Network
      Household Finance and Consumption Network (HFCN)
      18 August 2020
      WORKING PAPER SERIES - No. 2457
      Details
      Abstract
      This paper shows that individual beliefs on the effectiveness of formal and informal sources of risk sharing determine financial precautionary behavior. We present empirical evidence demonstrating that higher trust in public insurance systems reduces net liquid wealth while higher trust in communal insurance increases it. This dichotomy is consistent with theories on access to private risk sharing networks. Moreover, we find that both types of trust associate positively with the probability to take on financial risk for the purpose of becoming a homeowner and the related loan-to-value ratio. Our findings are robust across a wide range of econometric controls and specifications.
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E71 : Macroeconomics and Monetary Economics
      G5 : Financial Economics
      Network
      Household Finance and Consumption Network (HFCN)
      7 April 2020
      WORKING PAPER SERIES - No. 2389
      Details
      Abstract
      We analyse the effect of shocks to housing wealth and income before and after the Great Recession. We combine datasets containing information on expenditure, income, wealth and debt in a synthetic panel to understand how household indebtedness affects the response to income and wealth shocks. We find evidence for both a housing wealth effect and income shocks depressing household consumption during the crisis in Ireland. The long recovery of consumption is also related to high levels of indebtedness at the onset of the crisis. Households who entered the crisis with more debt are significantly more sensitive to changes in their income. In this way, household balance sheets can be an important amplification mechanism for aggregate shocks.
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      H31 : Public Economics→Fiscal Policies and Behavior of Economic Agents→Household
      Network
      Household Finance and Consumption Network (HFCN)
      26 March 2020
      STATISTICS PAPER SERIES - No. 36
      26 March 2020
      STATISTICS PAPER SERIES - No. 35
      19 February 2020
      WORKING PAPER SERIES - No. 2375
      Details
      Abstract
      Using micro data from the 2015 Dutch CentERpanel, we examine whether trust in the European Central Bank (ECB) influences individuals’ expectations and uncertainty about future inflation, and whether it anchors inflation expectations. We find that higher trust in the ECB lowers inflation expectations on average, and significantly reduces uncertainty about future inflation. Moreover, results from quantile regressions suggest that trusting the ECB increases (lowers) inflation expectations when the latter are below (above) the ECB’s inflation target. These findings hold after controlling for people’s knowledge about the objectives of the ECB.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D81 : Microeconomics→Information, Knowledge, and Uncertainty→Criteria for Decision-Making under Risk and Uncertainty
      E03 : Macroeconomics and Monetary Economics→General→Behavioral Macroeconomics
      E40 : Macroeconomics and Monetary Economics→Money and Interest Rates→General
      E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
      Network
      Household Finance and Consumption Network (HFCN)
      4 February 2020
      WORKING PAPER SERIES - No. 2372
      Details
      Abstract
      We address the question of whether the heterogeneity in savings is partly due to differences in pension wealth across individuals and across countries, using a European harmonised wealth survey (HFCS) combined with estimates of pension wealth (OECD). First, we find significant displacement effects of mandatory pension wealth on non-pension financial wealth at the mean, and a statistically significant crowd-out estimate on the probability of owning real estate property. Second, there is heterogeneity in the mean savings offset depending on age, risk attitudes and country. Third, the offset follows different patterns along the non-pension wealth distribution across countries.
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      H55 : Public Economics→National Government Expenditures and Related Policies→Social Security and Public Pensions
      Network
      Household Finance and Consumption Network (HFCN)
      8 January 2020
      WORKING PAPER SERIES - No. 2357
      Details
      Abstract
      This paper studies the heterogeneity of the marginal propensity to consume out of wealth (MPC) both across and within countries. We estimate the MPC based on a cross-country harmonized household level dataset which combines surveys on wealth, income and consumption. We use panel regressions and an instrumental variable approach. First, our panel-based MPC estimates are very similar to those obtained on aggregate data and show substantial heterogeneity across countries. The wealth effect is coming both from housing and financial assets, while the main asset channel varies between countries. Second, the MPC is higher for low-wealth households, whatever the country. Third, we find some asymmetries across countries regarding the reaction to losses versus gains. Fourth, higher MPC is obtained for the two main consumption expenditure categories. Fifth, we find evidences that housing prices shock decreases consumption inequality while financial wealth shocks have a limited effect on consumption inequality.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      C21 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Cross-Sectional Models, Spatial Models, Treatment Effect Models, Quantile Regressions
      Network
      Household Finance and Consumption Network (HFCN)
      16 December 2019
      WORKING PAPER SERIES - No. 2340
      Details
      Abstract
      This paper studies how peers’ financial behaviour affects individuals’ own investment choices. To identify the peer effect, we exploit the unique composition of the Luxembourg population and use the differences in stock market participation across various immigrant groups to study how they affect stock market participation of natives. We solve the reflection problem by instrumenting immigrants’ stock market participation with lagged participation rates in their countries of birth. We separate the peer effect from the contextual and correlated effects by controlling for neighbourhood and individual characteristics. We find that stock market participation of immigrant peers has sizeable effects on that of natives. We also provide evidence that social learning is one of the channels through which the peer effect is transmitted. However, social learning alone does not account for the entire effect and we conclude that social utility might also play an important role in peer effects transmission.
      JEL Code
      G5 : Financial Economics
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D83 : Microeconomics→Information, Knowledge, and Uncertainty→Search, Learning, Information and Knowledge, Communication, Belief
      G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
      I22 : Health, Education, and Welfare→Education and Research Institutions→Educational Finance, Financial Aid
      Network
      Household Finance and Consumption Network (HFCN)
      13 December 2019
      STATISTICS PAPER SERIES - No. 31
      Details
      Abstract
      Much of the literature on inequality, both that on the theoretical features of inequality measurement and that on the discussion of the results of empirical analysis, has preferred to focus on income inequality. This paper looks into the analysis of wealth inequality, which can be performed by carefully adapting the techniques used in the case of income distributions. The paper focuses on the measurement of inequality itself and includes an application to European data on wealth. We summarise the main inequality measures used in the economic literature, expanding the focus to lesser known but relevant ones, grounding their use in socio-economic theory and highlighting the connections between them. In particular, we investigate how each measure captures the same movement in the wealth distribution and why different measures can lead to differences in the observed change in inequality over time or across countries. In the main theoretical contribution of the paper we obtain a novel decomposition of changes in inequality measures as a set of equalising and disequalising factors, which sheds some light on the different results across indicators. We complement the analysis by focusing on the decomposition of wealth inequality measures, gaining an understanding of the contributions of inequality by wealth component and socio-demographic characteristics. The distribution of wealth of European households obtained by the Household Finance and Consumption Survey (HFCS) in 2010 and 2014 is used for empirical analysis and application of our methods.
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      D63 : Microeconomics→Welfare Economics→Equity, Justice, Inequality, and Other Normative Criteria and Measurement
      Network
      Household Finance and Consumption Network (HFCN)
      14 November 2019
      WORKING PAPER SERIES - No. 2328
      Details
      Abstract
      Using microdata from the second wave of the Household Finance and Consumption Survey, we investigate the accuracy of property values estimated by homeowners - so called “self-assessed” house prices - and explore the drivers of possible deviations of these prices from official hedonic house price indices. We find evidence that euro area homeowners overestimate the value of their properties by around 9%. Across the largest euro area countries, the overestimation lies in a range between 3.2% in Germany and 22% in Italy. Household characteristics, including the level of indebtedness, appear to explain significant discrepancies between hedonic and self-assessed house price indices, while the limited available data related to property characteristics are generally not affecting this gap. For the euro area, we find that higher self-assessed house prices are associated with a mild increase in consumption expenditures.
      JEL Code
      E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
      C21 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Cross-Sectional Models, Spatial Models, Treatment Effect Models, Quantile Regressions
      O18 : Economic Development, Technological Change, and Growth→Economic Development→Urban, Rural, Regional, and Transportation Analysis, Housing, Infrastructure
      Network
      Household Finance and Consumption Network (HFCN)
      6 May 2019
      WORKING PAPER SERIES - No. 2277
      Details
      Abstract
      Using household survey data, we document evidence of a loosening of credit standards in Euro area countries that experienced a property price boom-and-bust cycle. Borrowers in these countries exhibited significantly higher loan-to-value (LTV) and loan-to-income (LTI) ratios in the run up to the financial crisis, and an increasing tendency towards longer-term loans compared to borrowers in other countries. In recent years, despite the long period of historically low interest rates and substantial house price increases in some countries, we do not find similar credit easing as before the crisis. Instead, we find evidence of a considerable change in borrower characteristics since 2010: new borrowers are older and have higher incomes than before the crisis.
      JEL Code
      E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
      G01 : Financial Economics→General→Financial Crises
      G17 : Financial Economics→General Financial Markets→Financial Forecasting and Simulation
      G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
      R39 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Other
      Network
      Household Finance and Consumption Network (HFCN)
      18 April 2019
      WORKING PAPER SERIES - No. 2270
      Details
      Abstract
      We use cross-country microdata to analyse the risk taking of households in Europe and the US. Concerning the extensive as well as the intensive margin of risky assets, European households differ substantially from US households; but also inside Europe we document substantial differences. Furthermore, average risk aversion is strongly correlated with the share of households holding risky assets across countries. We decompose the observed differences into two parts. A part explainable by household characteristics as well as differences in risk aversion and a remainder. We employ the unexplained part resulting from our microeconometric decomposition analysis together with country-level variables on the economic environment to relate observed differences in risky asset holdings to institutional ones. We find that institutional differences such as shareholder protection are strongly correlated with the unexplainable differences with regard to holdings of risky assets.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
      Network
      Household Finance and Consumption Network (HFCN)
      26 March 2019
      WORKING PAPER SERIES - No. 2254
      Details
      Abstract
      This paper uses representative individual household data from Luxembourg to evaluate how severe economic conditions could affect bank exposure to the household sector. Information on household income, expenses and liquid assets are used to calculate household-specific probabilities of default (PD), aggregate bank exposure at default (EAD) and aggregate bank loss given default (LGD). The exercise is repeated with scenarios combining severe but plausible shocks to real estate prices, bonds and stocks, household income and interest rates. Compared to the no-shock baseline, the LGD rises by a multiple of eight, reaching 4.2% of total bank exposure to the household sector. The high-stress scenario also generates a relatively high percentage of defaults among socio-economically disadvantaged households. Our main conclusion is that bank losses appear to be quite sensitive to financial stress, despite three mitigating factors in Luxembourg: indebted households tend to hold liquid assets that can help smooth shocks, household leverage tends to decline rapidly once mortgages have been serviced several years, and loan-to-value ratios at origination appear not to be excessive.
      JEL Code
      D10 : Microeconomics→Household Behavior and Family Economics→General
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
      G01 : Financial Economics→General→Financial Crises
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      Network
      Household Finance and Consumption Network (HFCN)
      15 January 2019
      WORKING PAPER SERIES - No. 2222
      Details
      Abstract
      This paper provides new insights on the effect of inheritance receipt on retirement. We build on lifelong information on inheritances received and labor market transitions available for respondents of the French Wealth Survey. This feature allows us to compare current retirement rates among current and future inheritors. Chances of current retirement are 40% higher among current inheritors than among individuals who will inherit in the next two years, but there is substantial heterogeneity in this effect across socio-demographic groups. The effect is also stronger for individuals with a higher risk aversion, which we interpret with a simple theoretical model.
      JEL Code
      J14 : Labor and Demographic Economics→Demographic Economics→Economics of the Elderly, Economics of the Handicapped, Non-Labor Market Discrimination
      J26 : Labor and Demographic Economics→Demand and Supply of Labor→Retirement, Retirement Policies
      Network
      Household Finance and Consumption Network (HFCN)
      21 November 2018
      WORKING PAPER SERIES - No. 2204
      Details
      Abstract
      We estimate the long- and short-run relationship between top income and wealth shares for France and the US since 1913. We find strong evidence for a long-run cointegration relationship governed by relative saving rates at the top. For both countries, we estimate a decline in the relative saving rates at the top – after 1968 in France and 1983 in the US, equivalent to a reduction of the long-run gap between wealth and income inequality compared to the period before. In the short-run, income inequality drives wealth inequality, while the converse link is weaker and slower. Using counterfactual simulations, we find that the recent rise in wealth inequality in the US is largely attributable to the contemporary increase in income inequality. Modest income concentration dynamics and a stronger decline in relative saving rates at the top than in the US contributed to a more subdued rise in wealth inequality in France.
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      E25 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Aggregate Factor Income Distribution
      N32 : Economic History→Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy→U.S., Canada: 1913-
      N34 : Economic History→Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy→Europe: 1913-
      Network
      Household Finance and Consumption Network (HFCN)
      30 October 2018
      WORKING PAPER SERIES - No. 2190
      Details
      Abstract
      This paper studies the effects of quantitative easing on income and wealth of individual euro area households. The aggregate effects of quantitative easing are estimated in a multi-country VAR model of the four largest euro area countries, in which key variables affecting household income and wealth are included, such as the unemployment rate, wages, interest rates, house prices and stock prices. The aggregate effects are distributed across the individual households by means of a reduced-form simulation on micro data from the Household Finance and Consumption Survey, capturing the income composition, the portfolio composition and the earnings heterogeneity channels of transmission. We find that the earnings heterogeneity channel plays a key role: quantitative easing compresses the income distribution since many households with lower incomes become employed. In contrast, monetary policy has only negligible effects on wealth inequality.
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
      E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
      E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
      Network
      Household Finance and Consumption Network (HFCN)
      16 October 2018
      WORKING PAPER SERIES - No. 2187
      Details
      Abstract
      The financial accounts of the household sector within the system of national accounts report the aggregate asset holdings and liabilities of all households within a country. In principle, when household wealth surveys are explicitly designed to be representative of all households, aggregating these micro data should correspond to the macro aggregates. In practice, however, differences are large. We first discuss conceptual and generic differences between those two sources of data. Thereafter we investigate missing top tail observation from wealth surveys as a source of discrepancy. By fitting a Pareto distribution to the upper tail, we provide an estimate of how much of the gap between the micro and macro data is caused by the underestimation of the top tail of the wealth distribution. Conceptual and generic differences as well as missing top tail observations explain part of the gap between financial accounts and survey aggregates.
      JEL Code
      C46 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Specific Distributions, Specific Statistics
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
      Network
      Household Finance and Consumption Network (HFCN)
      12 October 2018
      WORKING PAPER SERIES - No. 2184
      Details
      Abstract
      We examine the role of trust in households’ decisions to hold a bank account and to switch to a new bank. We explore Italian household-level data that contain restricted information on the banks that the households are doing business with, as well as measures of trust in the households’ main bank and the banking sector. We find that households who distrust the banking sector are less likely to hold a bank account. Moreover, account holders are more likely to switch to a new main bank if they do not trust their current one. The estimated relationships persist over and above a range of socioeconomic variables.
      JEL Code
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      Network
      Household Finance and Consumption Network (HFCN)
      21 June 2018
      WORKING PAPER SERIES - No. 2163
      Details
      Abstract
      Macroeconomic aggregates on households’ wealth have a long tradition and are widely used to analyse and compare economies, yet they do not provide any information about the distribution of assets and liabilities within the population. The Household Finance and Consumption Survey (HFCS) constitutes a rich source of micro data that can be used to link macro aggregates with distributional information to compile Distributional National Accounts for wealth. Computing aggregates from this survey usually yields much lower amounts than what is reported by macroeconomic statistics. An important source of this gap may be the lack of the wealthiest households in the HFCS. This article combines a semi-parametric Pareto model estimated from survey data and observations from rich lists with a stratification approach making use of HFCS portfolio structures to quantify the impact of the missing wealthy households on instrument-specific gaps between micro and macro data. We analyse data for Austria and Germany, and find that adjusting for the missing wealthy pushes up inequality even further, increases instrument-specific aggregates, has large effects on equity, but explains less than ten percentage points of the micro-macro gap for most other instruments. Additionally, we document that some countries’ lack of an oversampling strategy for wealthy households limits the cross-country comparability of wealth inequality statistics.
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
      Network
      Household Finance and Consumption Network (HFCN)
      12 July 2017
      WORKING PAPER SERIES - No. 2087
      Details
      Abstract
      This paper presents new evidence on the impact of the preferential treatment of owner-occupied housing in Europe. We find that tax benefits to homeowners reduce the user cost of housing capital by almost 40 percent compared to the efficient level under neutral taxation. On average, the tax subsidy translates into an excess consumption of housing services equivalent to 7.8 percent of the value of owner-occupied housing, or about 30 percent of financial asset holdings in household portfolios. The bulk of the subsidies stems from under-taxation of the return to home equity, while the average contribution of the tax rebate for mortgage interest payments is driven down by relatively low loan-to-value ratios in the data. However, at the margin, the tax–induced incentive to use mortgage debt to finance the purchase of the main residence is sizable.
      JEL Code
      H24 : Public Economics→Taxation, Subsidies, and Revenue→Personal Income and Other Nonbusiness Taxes and Subsidies
      H31 : Public Economics→Fiscal Policies and Behavior of Economic Agents→Household
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      Network
      Household Finance and Consumption Network (HFCN)
      24 May 2017
      WORKING PAPER SERIES - No. 2069
      Details
      Abstract
      This paper examines the role of culture in households saving decisions. Exploiting the historical language borders within Switzerland, I isolate the effect of households’ exposure to certain language groups from economic, institutional, demographic and geographic factors for a homogeneous and representative sample of households. The analysis uses the Swiss Household Panel which I complement with geographic and socio-economic data. I show that low- and middle-income households located in the German-speaking part are more than 11 percentage points more likely to save than similar households in the French-speaking part. In line with the existing literature, I show that these differences across language regions are consistent with different distributions of time preferences. By contrast, I do not find clear evidence for risk sharing during times of financial distress.
      JEL Code
      Z1 : Other Special Topics→Cultural Economics, Economic Sociology, Economic Anthropology
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      Network
      Household Finance and Consumption Network (HFCN)
      23 May 2017
      STATISTICS PAPER SERIES - No. 22
      Details
      Abstract
      In this paper, we estimate consumption in the first wave of the Eurosystem Household Finance and Consumption Survey for a subset of countries that account for around 85% of the aggregate final consumption expenditure of households in the euro area. For this purpose we use the methodology described by Browning et al. (2003), taking advantage of the few questions on consumption asked to households participating in the survey and information on consumption collected in the Household Budget Surveys. Using also the framework developed for statistical matching, we give assessments of the uncertainty related to this kind of estimation. We find that the quality of estimation varies greatly across countries and in general is sensitive to the Conditional Independence Assumption implicitly made through this exercise. At any rate, estimations of consumption (provided throughout this paper) should be used with caution, bearing in mind that they rely on strong assumptions.
      JEL Code
      D120 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D140 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D310 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      Annexes
      23 May 2017
      ANNEX
      16 May 2017
      WORKING PAPER SERIES - No. 2062
      Details
      Abstract
      Drawing on the 2013 Household Finance and Consumption Survey (HFCS) and complementary administrative data sources, we simulate household balance sheets at the micro level for the 2005-14 period. We use this dataset to tell the story of household leveraging and deleveraging over a tumultuous period for the Irish economy. We show that deleveraging has proceeded at a signficantly faster pace for older households, when compared with younger age groups. In contrast, we find that a higher-incidence o f tracker mortgages amongst younger borrowers – which passed through the historically low ECB policy rates since 2009 – relative to older borrowers has played a major role in easing the debt repayment burden in the presence of large income shocks. Notwithstanding historically low interest rates, we show that income shocks are the main factor contributing to mortgage repayment problems. However, there is also a role for equity factors.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      3 February 2017
      WORKING PAPER SERIES - No. 2013
      Details
      Abstract
      We use information on monthly wage increases set by collective agreements in Italy and exploit their variation across sectors and over time in order to examine how household consumption responds to different types of positive income shocks (regular tranches versus lump-sum payments). Focusing on single-earner households, we find evidence of consumption smoothing in accordance with the Permanent-Income Hypothesis, since total and food consumption do not exhibit excess sensitivity to anticipated regular payments. Consumption does not respond at the date of the announcement of income increases either, as these are known to compensate workers for the overall loss in their wages' purchasing power. However, consumption responds, albeit a little, to transitory and less anticipated one-off payments, as the expenditures on clothing & shoes increase upon the receipt of the lump-sum payments. This behaviour is consistent with bounded rationality as consumers do not consider the lump-sum as part of the overall wage inflation adjustment.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      J51 : Labor and Demographic Economics→Labor?Management Relations, Trade Unions, and Collective Bargaining→Trade Unions: Objectives, Structure, and Effects
      Network
      Household Finance and Consumption Network (HFCN)
      20 January 2017
      WORKING PAPER SERIES - No. 1990
      Details
      Abstract
      This paper studies the determinants of being unbanked in the euro area and the United States as well as the effects of being unbanked on wealth accumulation. Based on household-level data from the euro area Household Finance and Consumption Survey and the U.S. Survey of Consumer Finance, it first documents that there are, respectively, 3.6% and 7.5% of unbanked households in the two economies. Low-income households, unemployed households and those with a poor education are the most likely to be affected, and remarkably more so in the United States than in the euro area. At the same time, there is a role for government policies in fostering financial inclusion. Using a propensity score matching approach to estimate the effects of being unbanked, it is found that banked households report substantially higher net wealth than their unbanked counterparts, with a gap of around
      JEL Code
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      Network
      Household Finance and Consumption Network (HFCN)
      23 December 2016
      STATISTICS PAPER SERIES - No. 18
      Details
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      23 December 2016
      STATISTICS PAPER SERIES - No. 17
      Details
      JEL Code
      C83 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Survey Methods, Sampling Methods
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      22 July 2016
      STATISTICS PAPER SERIES - No. 15
      Details
      Abstract
      The Household Finance and Consumption Survey (HFCS) is a recent initiative from the Eurosystem to collect comparable micro-data on household wealth and indebtedness in the euro area countries. The Household Finance and Consumption Network (HFCN), which comprises the European Central Bank (ECB), national central banks (NCBs), and national statistical institutes (NSIs), is in charge of the development and implementation of the HFCS. The first round of the survey was successfully conducted between 2008 and 2011, and the results were published in April 2013. The second round is now under way and will cover all the euro area countries. This paper is a joint effort by several members of the HFCN to further investigate the issue of unit non-response in the HFCS, better describe and understand its patterns, measure its effects on the overall quality of the survey and, ultimately, propose strategies to mitigate them. The paper is divided into sections, the first section being the introduction. The second section draws up a list of the main possible sources of auxiliary information that can be relied on in order to analyse non-response patterns in the HFCS. It also presents summary indicators that can be used to quantify unit non-response. In the third section, based on the experience from the first wave of the HFCS, the report elaborates on good survey practices (e.g. interviewer training and compensation, use of incentives, persuasive contact strategies, etc.) to prevent unit non-response from occurring. The fourth section compares several reweighting strategies for coping with unit non-response a posteriori, in particular simple and generalised calibration methods. These methods are assessed with respect to their impact on the main HFCS-based estimates. Finally, based on the outcome of this empirical analysis, recommendations are made with regard to post-survey weighting adjustment in the HFCS.
      JEL Code
      C83 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Survey Methods, Sampling Methods
      Network
      Household Finance and Consumption Network (HFCN)
      24 May 2016
      WORKING PAPER SERIES - No. 1908
      Details
      Abstract
      We study how unemployment affects the over-indebtedness of households using the new European Household Finance and Consumption Survey (HFCS). First, we assess the role of different labor market statuses (i.e. employed, unemployed, disabled, retired, etc.) and other household characteristics (i.e. demographics, housing status, household wealth and income, etc.) to determine the likelihood of over-indebtedness. We explore these relationships both at the Euro area level and through country-specific regressions. This approach captures country-specific institutional effects concerning all the different factors which can explain household indebtedness in its most severe form. We also examine the role that each country
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      J12 : Labor and Demographic Economics→Demographic Economics→Marriage, Marital Dissolution, Family Structure, Domestic Abuse
      Network
      Household Finance and Consumption Network (HFCN)
      24 May 2016
      WORKING PAPER SERIES - No. 1907
      Details
      Abstract
      Wealth survey data suffers simultaneously from under-representation at the top and underreporting of assets. Addressing both problems, I use the Household Finance and Consumption Survey to provide new estimates of the holdings of real assets, financial assets and liabilities and net wealth of the top one percent in Austria, Belgium, Finland, France, Germany, Italy, Spain and The Netherlands. Especially for countries doing little or no oversampling of the rich, financial asset and real asset shares held by the top 1 percent are substantially higher then survey data suggests.
      JEL Code
      E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
      E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
      G01 : Financial Economics→General→Financial Crises
      Network
      Household Finance and Consumption Network (HFCN)
      27 April 2016
      WORKING PAPER SERIES - No. 1899
      Details
      Abstract
      We revisit the transmission mechanism of monetary policy for household consumption in a Heterogeneous Agent New Keynesian (HANK) model. The model yields empirically realistic distributions of household wealth and marginal propensities to consume because of two key features: multiple assets with different degrees of liquidity and an idiosyncratic income process with leptokurtic income changes. In this environment, the indirect effects of an unexpected cut in interest rates, which operate through a general equilibrium increase in labor demand, far outweigh direct effects such as intertemporal substitution. This finding is in stark contrast to small- and medium-scale Representative Agent New Keynesian (RANK) economies, where intertemporal substitution drives virtually all of the transmission from interest rates to consumption.
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
      Network
      Household Finance and Consumption Network (HFCN)
      26 April 2016
      WORKING PAPER SERIES - No. 1897
      Details
      Abstract
      This lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively. The lecture argues that financial ignorance is pervasive and unsurprising given the complexity of modern financial products, and that it contributes meaningfully to the evolution of wealth inequality. The lecture uses a stylized model to discuss the welfare economics of paternalistic intervention in financial markets, and discusses several specific examples including asset allocation in retirement savings, fees for unsecured short-term borrowing, and reverse mortgages.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D18 : Microeconomics→Household Behavior and Family Economics→Consumer Protection
      G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
      Network
      Household Finance and Consumption Network (HFCN)
      5 February 2016
      WORKING PAPER SERIES - No. 1881
      Details
      Abstract
      We develop an integrated micro-macro model framework that is based on household survey data for a subset of the EU countries that the Household Finance and Consumption Survey (HFCS) contains. The model can be used for conducting scenario and sensitivity analyses with regard to the factors that drive households' income and expenses as well as their asset values and hence the structure of their balance sheet. Moreover, we use it for the purpose of assessing the efficacy of borrower-based macroprudential instruments, namely loan-to-value (LTV) ratio and debt service to income (DSTI) ratio caps. The simulation results from the model can be attached to bank balance sheets and their risk parameters to derive the impact of the policy measures on their capital position. The model framework also allows quantifying the macroeconomic feedback effects that would result from the policy-induced reduction of demand for mortgage loans. The model allows answering the question as to which of the two measures
      JEL Code
      C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
      E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
      G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
      Network
      Household Finance and Consumption Network (HFCN)
      24 September 2015
      WORKING PAPER SERIES - No. 1853
      Details
      Abstract
      We show that unexpected price level movements generate sizable wealth redistribution in the Euro Area (EA), using sectoral accounts and newly available data from the Household Finance and Consumption Survey. The EA as a whole is a net loser of unexpected price level decreases, with Italy, Greece, Portugal and Spain losing most in per capita terms, and Belgium and Malta being net winners. Governments are net losers of deflation, while the household (HH) sector is a net winner in the EA as a whole. HHs in Belgium, Ireland, Malta and Germany experience the biggest per capita gains, while HHs in Finland and Spain turn out to be net losers. Considerable heterogeneity exists also within the HH sector: relatively young middle class HHs are net losers of deflation, while older and richer HHs are winners. As a result, wealth inequality in the EA increases with unexpected deflation, although in some countries (Austria, Germany and Malta) inequality decreases due to the presence of relatively few young borrowing HHs. We document that HHs inflation exposure varies systematically across countries, with HHs in high inflation EA countries holding systematically lower nominal exposures.
      JEL Code
      E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      Network
      Household Finance and Consumption Network (HFCN)
      24 September 2015
      WORKING PAPER SERIES - No. 1852
      Details
      Abstract
      Savings accounts are owned by most households, but little is known about the performance of households
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      Network
      Household Finance and Consumption Network (HFCN)
      17 September 2015
      WORKING PAPER SERIES - No. 1847
      Details
      Abstract
      Using microdata from the Household Finance and Consumption Survey (HFCS), this study examines the role of inheritance, income and welfare state policies in explaining differences in household net wealth within and between euro area countries. First, about one third of the households in the 13 European countries we study report having received an inheritance, and these households have considerably higher net wealth than those which did not inherit. Second, regression analyses on households' relative wealth position show that, on average, having received an inheritance lifts a household by about 14 net wealth percentiles. At the same time, each additional percentile in the income distribution is associated with about 0.4 net wealth percentiles. These results are consistent across countries. Third, multilevel cross-country regressions show that the degree of welfare state spending across countries is negatively correlated with household net wealth. These findings suggest that social services provided by the state are substitutes for private wealth accumulation and partly explain observed differences in levels of household net wealth across European countries. In particular, the effect of substitution relative to net wealth decreases with growing wealth levels. This implies that an increase in welfare state spending goes along with an increase - rather than a decrease - of observed wealth inequality.
      JEL Code
      D30 : Microeconomics→Distribution→General
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      19 May 2015
      WORKING PAPER SERIES - No. 1790
      Details
      Abstract
      We study the role of household saving behaviour, of individual motives for saving and that of perceived liquidity constraints in 15 Euro Area countries. The empirical analysis is based on the Household Finance and Consumption Survey, a new harmonized data set collecting detailed information on wealth holdings, consumption and income at the household level. Since the data is from 2010-2011, strong conclusions as regards the present are difficult to draw. This is because the crisis may have affected the data, especially in countries that were severely hit. Nevertheless we find evidence of some degree of homogeneity across countries with respect to saving preferences and the relative importance of different motives for saving. In addition, credit constraints are more heterogeneous across geographic regions and perceived to be binding for specific groups of respondents. Households living in Mediterranean countries report to be more subject to binding liquidity constraints than households living in Continental Europe. Household characteristics and institutional macroeconomic variables are significant and economically important determinants of household saving preferences and credit constraints.
      JEL Code
      C8 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      Network
      Household Finance and Consumption Network (HFCN)
      10 March 2015
      WORKING PAPER SERIES - No. 1762
      Details
      Abstract
      Data from the 2009 Internet Survey of the Health and Retirement Study show that many U.S. households experienced large capital losses in housing and financial wealth, and that 5% of respondents lost their job during the Great Recession. As a consequence of these shocks, many households reduced substantially their expenditures. For every 10% loss in housing and financial wealth, the estimated drop in household expenditure is about 0.56% and 0.9%, respectively. In addition, those who became unemployed reduced spending by 10%. We also distinguish the effect of perceived transitory and permanent wealth shocks, splitting the sample between households who think that the stock market is likely to recover in a year
      JEL Code
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      Network
      Household Finance and Consumption Network (HFCN)
      22 October 2014
      WORKING PAPER SERIES - No. 1737
      Details
      Abstract
      We propose a novel framework to identify distressed households by taking account of both the solvency and the liquidity situation of an individual household. Using the data from the Household Finance and Consumption Survey and the country-level data on non-performing loans we calibrate our metric of distress and estimate stress-test elasticities in response to an interest rate shock, an income shock and a house price shock. We find that, albeit euro area households are relatively resilient as a whole, there are large discrepancies in the impact of macroeconomic shocks across countries. Furthermore, while losses given default as calculated using our framework are low, they are sensitive to house prices changes. Hence, any factors hindering the seizure of the collateral or lowering its value, such as inefficient legal systems, moratoria on foreclosures or bottlenecks in judicial procedures may significantly increase losses facing banks. Finally, we demonstrate that our framework could be used for macroprudential purposes, in particular for the calibration of country level loan-to-value ratio caps.
      JEL Code
      D10 : Microeconomics→Household Behavior and Family Economics→General
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      Network
      Household Finance and Consumption Network (HFCN)
      20 August 2014
      WORKING PAPER SERIES - No. 1722
      Details
      Abstract
      Using the first wave of the Eurosystem Household Finance and Consumption Survey (HFCS), a large micro-level dataset on households
      JEL Code
      D1 : Microeconomics→Household Behavior and Family Economics
      D3 : Microeconomics→Distribution
      Network
      Household Finance and Consumption Network (HFCN)
      18 August 2014
      WORKING PAPER SERIES - No. 1718
      Details
      Abstract
      We estimate non-cash income from owner occupied housing, subsidized rental housing, or free use of one's main residence and evaluate their impact on the unconditional distribution of household income and selected inequality measures. We confirm the standard finding in the literature that imputed rents accruing to home owners have an equalizing effect on the distribution of income and find similar evidence for non-cash income from subsidized rents. Whereas imputed rents equalize the upper part of the income distribution, subsidized housing has an equalizing effect on the lower part of the income distribution. Overall, the effect of non-cash income from owner occupied housing clearly dominates the distributional effects, which translates into a combined effect of around 15% higher income for the bottom half and around 10% for the upper half of the unconditional income distribution. Our data provide us with the rare opportunity to apply all three commonly used approaches to calculate imputed rents for owner occupiers: capital-, self-assessment and equivalent rent approach. We find that using the equivalent rent approach leads to the strongest reduction in income inequality.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      6 August 2014
      WORKING PAPER SERIES - No. 1709
      Details
      Abstract
      This article aims at linking the household wealth and income distributions for 15 European countries using the Household Finance and Consumption Survey. We study the role played by the household
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      C35 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Discrete Regression and Qualitative Choice Models, Discrete Regressors, Proportions
      Network
      Household Finance and Consumption Network (HFCN)
      4 August 2014
      WORKING PAPER SERIES - No. 1705
      Details
      Abstract
      We extend household-level data from the Household Finance and Consumption Survey using aggregate series and micro-simulations to investigate heterogeneity in the euro area. We quantify shocks to wealth, income and financial pressure faced by various categories of households since the onset of the Great Recession. The shocks differ substantially both across countries and across economic and socio-demographic characteristics. We find that the rising unemployment rate disproportionately affected the income-poor, while the declining wealth the income-rich. Although borrowers benefited from the substantial decrease in interest rates, debt service-income and debt-income ratios for poor households went up as they faced falling incomes. Household deleveraging was primarily driven by the restrained mortgage borrowing by the young. In several countries and at the euro-area level the unprecedented declines in asset prices substantially contributed to the sluggish consumption growth driven by both rich and poor households: while the former were hit by large shocks to wealth, the latter also significantly cut their spending because of their high MPCs.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      14 July 2014
      WORKING PAPER SERIES - No. 1692
      Details
      Abstract
      The US Survey of Consumer Finances (SCF) and the Eurosystem
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      11 July 2014
      WORKING PAPER SERIES - No. 1690
      Details
      Abstract
      Results from the Eurosystem Household Finance and Consumption Survey reveal substantial variation in household net wealth across euro area countries that await explanation. This paper focuses on three main factors for the wealth accumulation process, i) homeownership, ii) housing value appreciation and iii) intergenerational transfers. We show that these three factors, in addition to the common household and demographic factors, are relevant for the net wealth accumulation process in all euro area countries, and moreover that, using various decomposition techniques, differences therein, in particular in homeownership rates and house price dynamics, are important for explaining wealth differences across euro area countries.
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
      C42 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Survey Methods
      Network
      Household Finance and Consumption Network (HFCN)
      13 May 2014
      WORKING PAPER SERIES - No. 1673
      Details
      Abstract
      This paper compares the survey results on savings deposits and estimates on total financial assets from the Household Finance and Consumption Survey (HFCS) in Austria with administrative records from the national accounts for the household sector. The micro data newly generated through the HFCS and the detailed (internally available) breakdowns of savings deposits in the existing macro data (Financial Accounts) lend themselves to a more in-depth analysis of the similarities and differences in these two sources than what has been done in the literature so far. Cross-checking the data shows that the HFCS-based aggregate estimates differ from the financial accounts data, which is line with evidence from the literature, but additionally the paper adds to the literature that the underlying patterns have been captured adequately by the survey at the micro level. Moreover, a simulation based on the HFCS data serves to demonstrate the effect that the inclusion of savings deposits in the most affluent tail of the distribution has on common statistics. Undercoverage above all of the upper deposit ranges suggests an underestimation or bias in the statistics. This underestimation, however, can be shown to be relatively minor, in particular in the case of robust statistical measures such as the median or percentile ratios.
      JEL Code
      C80 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→General
      D30 : Microeconomics→Distribution→General
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      7 May 2014
      WORKING PAPER SERIES - No. 1672
      Details
      Abstract
      Crossing borders, be it international or regional, often go together with price, wage or indeed wealth discontinuities. This paper identifies substantial wealth differences between Luxembourg resident households and cross-border commuter households despite their similar incomes. The average (median) net wealth difference is estimated to be
      JEL Code
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      J61 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→Geographic Labor Mobility, Immigrant Workers
      F22 : International Economics→International Factor Movements and International Business→International Migration
      R23 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
      R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
      Network
      Household Finance and Consumption Network (HFCN)
      2 April 2014
      WORKING PAPER SERIES - No. 1664
      Details
      Abstract
      We propose a new method to identify the impact of a change in the tax burden on mutual fund inflows, exploiting a switch from an accrual-based to a realisation-based tax regime. We use quasi-experimental data from Italy where, starting from July 2011, the tax regime for domestic mutual funds was changed from an accruals basis to a realisation basis, while the taxation of foreign funds remained on a realisation basis. We find that the reform has had a positive effect on net inflows of Italian funds (the treated group) with respect to foreign funds (the control group). The effect is both economically and statistically significant. Moreover, we find no evidence that the increase in the demand for Italian funds came at the expense of foreign funds.
      JEL Code
      G20 : Financial Economics→Financial Institutions and Services→General
      G2 : Financial Economics→Financial Institutions and Services
      H2 : Public Economics→Taxation, Subsidies, and Revenue
      Network
      Household Finance and Consumption Network (HFCN)
      1 April 2014
      WORKING PAPER SERIES - No. 1663
      Details
      Abstract
      We study the link between household structure and cross country differences in the wealth distribution using a recently compiled data set for the euro area (HFCS). We estimate counterfactual distributions using non-parametric re-weighting to examine the extent to which differences in the unconditional distributions of wealth across euro area countries can be explained by differences in household structure. We find that imposing a common household structure has strong effects on both the full unconditional distributions as well as its mappings to different inequality measures. For the median 50% of the differences are explained for Austria, 15% for Germany, 25% for Italy, 14% for Spain and 38% for Malta. For others as Belgium, France, Greece, Luxembourg, Portugal, Slovenia and Slovakia household structure masks the differences to the euro area median and Finland and the Netherlands change their position from below to above the euro area median. The impact on the mean and percentile ratios is similarly strong and varies with regard to direction and level across countries and their distributions. We can confirm the finding of Bover (2010) that the effect on the Gini is somewhat less pronounced, but might mask relevant information by being a net effect of different accumulated effects along the distribution. Country rankings based on almost all of these measures are severely affected alluding to the need for cautious interpretation when dealing with such rankings. Furthermore, the explanatory power of household structure changes along the net wealth distribution. Therefore we argue for more flexible controls for household structure. We provide such a set of controls to account for household type fixed effects which are based on the number of household members as well as possible combinations of age categories and gender.
      JEL Code
      D30 : Microeconomics→Distribution→General
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      Annexes
      1 April 2014
      ANNEX
      1 April 2014
      WORKING PAPER SERIES - No. 1662
      Details
      Abstract
      We use a unique dataset with bank clients
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D13 : Microeconomics→Household Behavior and Family Economics→Household Production and Intrahousehold Allocation
      G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      Network
      Household Finance and Consumption Network (HFCN)
      31 March 2014
      WORKING PAPER SERIES - No. 1661
      Details
      Abstract
      This paper analyses empirically how cross-border consumption varies across product and services categories and across household characteristics. It focuses on the part of cross-border sales that arise due to work-related cross-border crossings; it analyses the cross-border consumption behaviour of cross-border commuter households residing in Belgium, France and Germany and working in Luxembourg. In total, it is estimated that these households spend
      JEL Code
      F15 : International Economics→Trade→Economic Integration
      R12 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→Size and Spatial Distributions of Regional Economic Activity
      R23 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
      J61 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→Geographic Labor Mobility, Immigrant Workers
      Network
      Household Finance and Consumption Network (HFCN)
      27 March 2014
      WORKING PAPER SERIES - No. 1660
      Details
      Abstract
      U.S. consumers
      JEL Code
      E41 : Macroeconomics and Monetary Economics→Money and Interest Rates→Demand for Money
      E42 : Macroeconomics and Monetary Economics→Money and Interest Rates→Monetary Systems, Standards, Regimes, Government and the Monetary System, Payment Systems
      Network
      Household Finance and Consumption Network (HFCN)
      17 March 2014
      WORKING PAPER SERIES - No. 1657
      Details
      Abstract
      This paper develops a structural model of the costs and beliefs required to rationalize household direct stock ownership. In the model, households believe they can learn information about individual stock returns through costly research. The model provides a novel explanation for many empirical features of household portfolios. Further, the model identifies the distributions of both household research costs and household beliefs about the predictability of individual stock returns. Identification depends only on households
      JEL Code
      G02 : Financial Economics→General→Behavioral Finance: Underlying Principles
      G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
      Network
      Household Finance and Consumption Network (HFCN)
      14 March 2014
      WORKING PAPER SERIES - No. 1656
      Details
      Abstract
      In this paper we examine the link between wage inequality and consumption inequality using a life cycle model that incorporates household consumption and family labour supply decisions. We derive analytical expressions based on approximations for the dynamics of consumption, hours, and earnings of two earners in the presence of correlated wage shocks, non-separability and asset accumulation decisions. We show how the model can be estimated and identified using panel data for hours, earnings, assets and consumption. We focus on the importance of family labour supply as an insurance mechanism to wage shocks and find strong evidence of smoothing of male
      JEL Code
      D11 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Theory
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      Network
      Household Finance and Consumption Network (HFCN)
      14 March 2014
      WORKING PAPER SERIES - No. 1655
      Details
      Abstract
      We present a macroeconomic model calibrated to match both microeconomic and macroeconomic evidence on household income dynamics. When the model is modified in a way that permits it to match empirical measures of wealth inequality in the U.S., we show that its predictions (unlike those of competing models) are consistent with the substantial body of microeconomic evidence which suggests that the annual marginal propensity to consume (MPC) is much larger than the 0.02_0.04 range implied by commonly-used macroeconomic models. Our model also (plausibly) predicts that the aggregate MPC can differ greatly depending on how the shock is distributed across categories of households (e.g., low-wealth versus high-wealth households).
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      12 March 2014
      WORKING PAPER SERIES - No. 1652
      Details
      Abstract
      This paper studies to what extent the experiences of households shape their willingness to take financial risks. It follows the methodology of Malmendier and Nagel (2011) and applies it to a novel data set on household finances covering euro area households. We show that experienced stock market returns matter in a statistically significant and economically substantial fashion: better experiences increase the financial risk households are willing to take as well as stock market participation along the intensive and the extensive margin. We find that more distant experiences receive a somewhat lower (but still substantial) weight than the corresponding findings suggest for the United States. Furthermore, there are additional effects stemming from the experience of extreme stock market downturns. Households in countries that witnessed a particularly severe 2008 stock market crash give substantially more weight to the most recent experience, suggesting that in these countries an even more pronounced underinvestment in the stock market should be expected in the years to come. The evidence highlights the relevance of personal experiences for household behaviour.
      JEL Code
      D03 : Microeconomics→General→Behavioral Microeconomics, Underlying Principles
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D83 : Microeconomics→Information, Knowledge, and Uncertainty→Search, Learning, Information and Knowledge, Communication, Belief
      G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
      Network
      Household Finance and Consumption Network (HFCN)
      10 March 2014
      WORKING PAPER SERIES - No. 1648
      Details
      Abstract
      Using new micro data on household wealth from fifteen European countries, the Household Finance and Consumption Survey, we first document the substantial cross-country variation in how various measures of wealth are distributed across individual households. Through the lens of a standard, realistically calibrated model of buffer-stock saving with transitory and permanent income shocks we then study how cross-country differences in the wealth distribution and household income dynamics affect the marginal propensity to consume out of transitory shocks (MPC). We find that the aggregate consumption response ranges between 0.1 and 0.4 and is stronger (i) in economies with large wealth inequality, where a larger proportion of households has little wealth, (ii) under larger transitory income shocks and (iii) when we consider households only using liquid assets (rather than net wealth) to smooth consumption.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      D91 : Microeconomics→Intertemporal Choice→Intertemporal Household Choice, Life Cycle Models and Saving
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      20 February 2014
      WORKING PAPER SERIES - No. 1639
      Details
      Abstract
      The aim of this paper is twofold. First, we present an up-to-date assessment of the differences across euro area countries in the distributions of various measures of debt conditional on household characteristics. We consider three different outcomes: the probability of holding debt, the amount of debt held and, in the case of secured debt, the interest rate paid on the main mortgage. Second, we examine the role of legal and economic institutions in accounting for these differences. We use data from the first wave of a new survey of household finances, the Household Finance and Consumption Survey, to achieve these aims. We find that the patterns of secured and unsecured debt outcomes vary markedly across countries. Among all the institutions considered the length of asset repossession periods best accounts for the features of the distribution of secured debt. In countries with longer repossession periods, the fraction of people who borrow is smaller, the youngest group of households borrow lower amounts (conditional on borrowing), and the mortgage interest rates paid by low-income households are higher. Regulatory loan-to-value ratios, the taxation of mortgages and the prevalence of interest-only or fixed rate mortgages deliver less robust results.
      JEL Code
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
      K35 : Law and Economics→Other Substantive Areas of Law→Personal Bankruptcy Law
      Network
      Household Finance and Consumption Network (HFCN)
      29 January 2014
      WORKING PAPER SERIES - No. 1631
      Details
      Abstract
      Mortgages constitute the largest part of household debt. An essential choice when taking out a mortgage is between fixed-interest-rate mortgages (FRMs) and adjustable-interest-rate mortgages (ARMs). However, so far, no comprehensive cross-country study has analysed what determines household demand for mortgage types, a task that this paper takes up using new data for the euro area. Our results support the hypothesis of Campbell and Cocco (2003) that the decision is best described as one of household risk management: income volatility reduces the take-out of ARMs, while increasing duration and relative size of the mortgages increase it. Controlling for other supply factors through country fixed effects, loan pricing also matters, as expected, with ARMs becoming more attractive when yield spreads rise. The paper also conducts a simulation exercise to identify how the easing of monetary policy during the financial crisis affected mortgage holders. It shows that the resulting reduction in mortgage rates produced a substantial decline in debt burdens among mortgage-holding households, especially in countries where households have higher debt burdens and a larger share of ARMs, as well as for some disadvantaged groups of households, such as those with low income.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
      E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
      G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
      Network
      Household Finance and Consumption Network (HFCN)
      27 November 2013
      WORKING PAPER SERIES - No. 1619
      Details
      Abstract
      The report on the Measurement of Economic Performance and Social Progress by Stiglitz, Sen and Fitoussi concludes that in the measurement of household welfare all material components should be covered, i.e. consumption, income and wealth, from both the micro as well as the macro perspective. Additionally, several other initiatives like the G20 finance ministers
      JEL Code
      D30 : Microeconomics→Distribution→General
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      E01 : Macroeconomics and Monetary Economics→General→Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts
      E21 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Consumption, Saving, Wealth
      Network
      Household Finance and Consumption Network (HFCN)
      8 April 2013
      STATISTICS PAPER SERIES - No. 2
      Details
      Abstract
      This report summarises key stylised facts from the first wave of the Eurosystem Household Finance and Consumption Survey, which provides household-level data collected in a harmonised way in 15 euro area countries for a sample of more than 62,000 households. The report presents results on household assets and liabilities, income, and indicators of consumption and credit constraints.
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      Annexes
      6 December 2013
      ANNEX
      8 April 2013
      STATISTICS PAPER SERIES - No. 1
      Details
      Abstract
      This report summarises the methodologies used in the first wave of the Eurosystem Household Finance and Consumption Survey, which provides household-level data collected in a harmonised way in 15 euro area countries for a sample of more than 62,000 households. The report presents the methodologies applied in areas such as data collection, sample design, weighting, imputation, and variance estimation. It also analyses issues like differential unit and item non-response and other issues that may have an effect on the comparability of the survey data across countries
      JEL Code
      D12 : Microeconomics→Household Behavior and Family Economics→Consumer Economics: Empirical Analysis
      D14 : Microeconomics→Household Behavior and Family Economics→Household Saving; Personal Finance
      D31 : Microeconomics→Distribution→Personal Income, Wealth, and Their Distributions
      Network
      Household Finance and Consumption Network (HFCN)
      Related
      SEE ALSO

      Find out more about related content

      HOUSEHOLD FINANCE AND CONSUMPTION NETWORK (HFCN)

      More

      HOUSEHOLD FINANCE AND CONSUMPTION SURVEY (HFCS)

      More