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Financial imbalances and household welfare: empirical evidence from the EU

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  • Stracca, Livio

Abstract

This paper uses Eurobarometer survey data from 26 EU countries to evaluate whether the general public cares about financial stability and imbalances over and above their effects on key macroeconomic variables such as unemployment and inflation. I confirm previous results in the literature that life satisfaction - a widely used measure of household welfare - negatively depends on the unemployment rate. In addition to previous results in the literature, I establish a strong empirical link between life satisfaction and consumer confidence as measured by the European Commission consumer survey. The main result of the paper is that life satisfaction generally does not systematically depend on a number of measures of financial imbalance based on credit and asset prices once the other macroeconomic controls are included. JEL Classification: E6

Suggested Citation

  • Stracca, Livio, 2013. "Financial imbalances and household welfare: empirical evidence from the EU," Working Paper Series 1543, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20131543
    Note: 335958
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    References listed on IDEAS

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    Cited by:

    1. Bank for International Settlements, 2016. "Objective-setting and communication of macroprudential policies," CGFS Papers, Bank for International Settlements, number 57, december.
    2. Avdjiev, Stefan & Binder, Stephan & Sousa, Ricardo, 2021. "External debt composition and domestic credit cycles," Journal of International Money and Finance, Elsevier, vol. 115(C).
    3. Philip R Lane & Livio Stracca, 2018. "Can appreciation be expansionary? Evidence from the euro area," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(94), pages 225-264.
    4. Arnaud Joskin, 2017. "Working Paper 04-17 - Qu’est-ce qui compte pour les Belges ? Analyse des déterminants du bien-être individuel en Belgique [Working Paper 04-17 - Wat telt voor de Belgen? Analyse van de determinante," Working Papers 1704, Federal Planning Bureau, Belgium.
    5. Anna Kalbhenn & Livio Stracca, 2020. "Mad about Austerity? The Effect of Fiscal Consolidation on Public Opinion," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(2-3), pages 531-548, March.
    6. Stracca, Livio & Kalbhenn, Anna, 2015. "Does fiscal austerity affect public opinion?," Working Paper Series 1774, European Central Bank.

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    More about this item

    Keywords

    central bank; consumer confidence; Eurobarometer; Financial Stability; life satisfaction;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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