Recent changes in saving behaviour by Belgian households : the impact of uncertainty

Belgian households save a lot in comparison to the average for the euro area. Recently, the household saving rate has shown large swings. During the great recession, it temporarily jumped to a record high but since then it has gradually fallen to record lows. Different factors of a structural or cyclical nature may account for these swings. The objective of the article is to gauge to what extent uncertainty related to the general economic outlook or households’ income prospects has contributed to changes in households’ saving behaviour. However, uncertainty is not directly observable and needs to be estimated. Different approaches are used, including most notably an uncertainty indicator based upon the heterogeneity in the responses given by consumers to specific questions in the Bank’s consumer survey. The author assesses the significance of these uncertainty indicators for household saving using an error correction model. Her empirical results suggest that, apart from reported consumer sentiment, the uncertainty surrounding households’ prospects, in particular as regards their future financial situation, does also play a role in the short-term dynamics of the savings ratio and may contribute to explaining deviations from its long-run equilibrium value.