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Household Savings in Selected Southern European Countries Evidence from Cross-Country Micro-Level Data

Author

Listed:
  • Mr. Kamil Dybczak
  • Shiqing Hua
  • Mariusz Jarmuzek
  • Ruifeng Zhang
  • Yipei Zhang

Abstract

The paper looks into the puzzle of low household savings in three Southern European (SE3) countries – Cyprus, Greece, and Portugal. Building on the household saving drivers literature, we employ cross-country micro-level data and investigate the key saving patterns, examining their heterogeneity across households in SE3 countries relative to the EA average. The results confirm the prominent role of income, along with interest rate, inflation, fiscal balance, and debt in shaping household savings in SE3 countries. Quantile regressions employed to analyze saving behavior across the distribution of households suggest that households with lower savings tend to see their savings dip (or dissavings rise) more-than-proportionately with shocks to income, interest rate, inflation, and government balance. Our policy simulations across the distribution of households suggest that targeted rather than universal policy intervention could improve household savings, especially of the most vulnerable ones.

Suggested Citation

  • Mr. Kamil Dybczak & Shiqing Hua & Mariusz Jarmuzek & Ruifeng Zhang & Yipei Zhang, 2023. "Household Savings in Selected Southern European Countries Evidence from Cross-Country Micro-Level Data," IMF Working Papers 2023/150, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/150
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    Keywords

    Household savings; distributional analysis; policy simulations; household saving; saving pattern; inflation shock; household saving rate; Income; Consumption; Income shocks; Inflation; Disposable income; Southern Europe;
    All these keywords.

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