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Durable goods and their effect on household saving ratios in the euro area

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  • Jalava, Jukka
  • Kavonius, Ilja Kristian

Abstract

The purpose of this paper is to estimate the impact of capitalising durable goods on the Euro area household saving ratios and disposable incomes for the first time. The reason for this exercise is twofold. Firstly, it is generally accepted that individual households regard consumer durables as assets even though they are not treated as such in the System of National Accounts 1993. Secondly, the issue is related to the definition of household saving ratios. For instance, the U.S. Federal Reserve Board publishes three household saving measures. The main difference between these saving ratios is that one is derived by treating expenditure on consumer durables as investments while the other ones are compiled by considering them to be household final consumption expenditure. We find that the effect of capitalising consumer durables on EA saving ratios is moderate. The impact is lower than it is in the US. JEL Classification: E21, E22

Suggested Citation

  • Jalava, Jukka & Kavonius, Ilja Kristian, 2007. "Durable goods and their effect on household saving ratios in the euro area," Working Paper Series 755, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2007755
    Note: 374170
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp755.pdf
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    References listed on IDEAS

    as
    1. Calcagno, Riccardo & Heider, Florian, 2007. "Market based compensation, price informativeness and short-term trading," Working Paper Series 735, European Central Bank.
    2. Ramon-Ballester, Francisco & Wezel, Torsten, 2007. "International financial linkages of Latin American banks: the effects of political risk and deposit dollarisation," Working Paper Series 744, European Central Bank.
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    Cited by:

    1. Robert Huterski & Agnieszka Anna Huterska & Justyna Łapińska & Ewa Zdunek-Rosa, 2020. "The problem of savings exclusion and gross savings in the new European Union member states," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(3), pages 2470-2480, March.
    2. Lombardo, Giovanni & Vestin, David, 2008. "Welfare implications of Calvo vs. Rotemberg-pricing assumptions," Economics Letters, Elsevier, vol. 100(2), pages 275-279, August.
    3. Jalava, Jukka & Kavonius, Ilja Kristian, 2008. "The effect of durable goods and ICT on euro area productivity growth?," Working Paper Series 940, European Central Bank.
    4. Elena Fregonara & Rocco Curto & Mario Grosso & Paolo Mellano & Diana Rolando & Jean-Marc Tulliani, 2013. "Environmental Technology, Materials Science, Architectural Design, and Real Estate Market Evaluation: A Multidisciplinary Approach for Energy-Efficient Buildings," Journal of Urban Technology, Taylor & Francis Journals, vol. 20(4), pages 57-80, October.

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    More about this item

    Keywords

    asset; disposable income; durable good; saving ratio; user cost;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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