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The recent drivers of household savings across the wealth distribution

Author

Listed:
  • Battistini, Niccolò
  • Bobasu, Alina
  • Gareis, Johannes

Abstract

This box reviews the dynamics of household savings as derived from deposit flows across the wealth distribution from the onset of the COVID-19 pandemic in the first quarter of 2020 to the surge in inflation that started in the second quarter of 2021. An empirical model disentangles the underlying drivers of household deposit flows across the wealth distribution. Pandemic-related restrictions initially led to an increase in deposit flows, while increases in inflation arising mostly from cost-push shocks subsequently weighed on deposit flows, raising savings inequality in both cases. It is likely that developments in deposit dynamics and savings inequality will continue to be shaped by pandemic-related restrictions and cost-push inflation, as well as uncertainty caused by the war in Ukraine. JEL Classification: D12, D14, R20, Q11

Suggested Citation

  • Battistini, Niccolò & Bobasu, Alina & Gareis, Johannes, 2022. "The recent drivers of household savings across the wealth distribution," Economic Bulletin Boxes, European Central Bank, vol. 3.
    • Handle: RePEc:ecb:ecbbox:2022:0003:3
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    More about this item

    Keywords

    COVID-19; household deposits; inequality; inflation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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