LONG-RUN DETERMINANTS OF CONSUMPTION IN THE EURO AREA: IS THERE A ROLE FOR UNCERTAINTY?

• Authors: Dajcman Silvo
• Languages of publication: EN

Abstracts

EN

This paper examines the long-run (co-integrating) relationship between real consumption, real disposable income, real net financial wealth, real housing wealth, and uncertainties in future income (income uncertainty) and the rate of return on accumulated financial wealth (capital uncertainty) for a panel of 12 euro area countries. Using proxies for the unobservable housing wealth and income and capital uncertainty, we show that such a relationship does exist, but it is not homogenous for the euro area as a whole. Real disposable income and real net financial wealth are the main determinants of real consumption for the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) and non-PIIGS (Austria, Belgium, Finland, France, Germany, Netherlands, and Slovenia) euro areas. Income and capital uncertainties are negatively associated with real consumption, but only in the PIIGS euro area.

Keywords

EN

CONSUMPTION; INCOME; WEALTH; UNCERTAINTY; EURO AREA

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2018
• Volume: 66
• Issue: 10
• Pages: 969 – 986

Contributors

author

Dajcman Silvo

• University of Maribor, Faculty of Economics and Business, Razlagova 14, 2000 Maribor, Slovenia