SLIDE 1
Eurostat
Focus on consumption & saving
"For New Classical economics, since saving is the result
- f individual utility maximization, it must, absent
economic crisis Filippo Gregorini Leonidas Akritidis Eurostat, Unit - - PowerPoint PPT Presentation
economic crisis Filippo Gregorini Leonidas Akritidis Eurostat, Unit - - PowerPoint PPT Presentation
Households in Europe in years of economic crisis Filippo Gregorini Leonidas Akritidis Eurostat, Unit C.1 Sector Accounts NTTS Conference Brussels, 11 March 2014 Focus on consumption & saving "For New Classical economics , since
SLIDE 2
SLIDE 3
Eurostat
Classical theories, and the crisis
What (should) help explaining the fluctuations of the household saving ratio
- ver the period 1999 to 2013?
- Precautionary motive - Keynes (1936)
- Consumption smoothing - Friedman (1957)
- Risk aversion - Leland (1968)
- BUT in the PRESENCE of CREDIT CONSTRAINTS, to react to
(anticipated or not) income changes in most cases is simply NOT a viable option! – Jappelli and Pistaferri (2010)
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SLIDE 4
Eurostat
The crisis, and its consequences
"Europe was a quite remarkable integration machine when Solow-type convergence was not very widespread. It would be quite a paradox if the continent were to now experience prolonged divergence when Solow is making a comeback at the global level." [Pierre Wunsch, 2013]
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SLIDE 5
Eurostat
The story
1. The relevance of household sector (S14_S15) 2. Earning & spending 3. Savings & consumer durables 4. Further controls
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SLIDE 6
Eurostat
The relevance of households (S14_S15)
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% European Union (28 countries) Euro area (18 countries) Germany Spain France Italy United Kingdom
S14_S15 contribution to S1 GDI
1999-2007 2007-2013
SLIDE 7
Eurostat
Nominal growth of earning & spending
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- 1%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% European Union (28 countries) Euro area (18 countries) Germany Spain
Yearly S14_S15 GDI nominal growth
1999-2007 2007-2013
- 1%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% European Union (28 countries) Euro area (18 countries) Germany Spain
Yearly S14_S15 P31 nominal growth
1999-2007 2007-2013
SLIDE 8
Eurostat
DE and ES: a comparison… …in per capita terms
Up to 2009, Spain nominally grew faster than Germany, but then it shows no growth, whereas Germany kept on increasing since 2009, after a stable path in 2007-2009. Germany population remained stable (from 81.7 and 82.5 mlns) between 1999 and 2013. In the same period, Spain population increased from 40 to almost 47 mlns.
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4,000 5,000 6,000 7,000 8,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gap in per capita GDI between Germany and Spain
(thousands of euro)
SLIDE 9
Eurostat
Savings: somewhere "stable"
9
100,000 200,000 300,000 400,000 500,000 600,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gross savings
European Union (28 countries) (left) Euro area (18 countries) (left) Germany (right) Spain (right)
SLIDE 10
Eurostat
Correction for durables*?
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*The definitions of consumer durables are based on the United Nation COICOP classification of final Household consumption expenditure, which are as follows:
- CP051 - Furniture and
Fittings
- CP053 - Household
appliances
- CP055 - Tools and
equipment for House and Garden
- CP071 - Purchase of
vehicles
- CP082 - Telephone and
telefax equipment
- CP091 - Audio-visual
equipment
- CP092 - Other major
durables for recreation and culture
- CP123 - Personal effects
n.e.c.
20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Durables consumption as % of savings
Germany Spain
In Spain fall of consumer durables together with saving boom in 2007-2009. Then decline of savings and low level of consumer durables.
SLIDE 11
Eurostat
…in per capita terms
11
After the Spanish saving boom (2007-2009, bad future expectations) a constant increase of gaps in terms of both savings and consumer durables.
2,000 2,500 3,000 3,500 4,000 500 1,000 1,500 2,000 2,500 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Gap in per capita savings and durables between Germany and Spain (thousands of euro)
Total (right) Savings (left) Durables (left)
SLIDE 12
Eurostat
Correlation between earning & spending in the EU after 2007
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MSs whose correlation is above 0.9 MSs whose correlation is below 0.9 Missing data Incomplete information
SLIDE 13
Eurostat
Saving rate variance in the EU
The tables rank EU countries by changes in saving rate variance in 2007-2013 compared to 1999-2007.
The countries in red are the ones where the correlation between earning and spending has fallen below 0.9 after 2007 (map on previous slide). 13
by SAVING RATE by SAVING RATE corrected for durables
Latvia Slovenia Lithuania Cyprus Denmark Slovakia Sweden United Kingdom Portugal Hungary Croatia Spain Germany Netherlands Czech Republic Belgium Italy Austria France Finland Cyprus Latvia Lithuania Portugal Italy Slovenia Denmark Slovakia Belgium Austria Spain Czech Republic United Kingdom Hungary Finland France Germany
SLIDE 14
Eurostat
Further controls
- Financial assets analysis show increases in liabilities from 2007
- nwards, in particular in "red" countries.
- Real assets (housing) play a decisive role in determining the net wealth of
- households. Homeowners share is 82.7% in Spain and 44.2% in
- Germany. It is therefore apparent that the relative position of
households in countries where homeowners share is high and the housing bubble occurred is worsening. [source: Eurosystem Household Finance and Consumption Survey, ECB 2013]
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SLIDE 15
Eurostat
It's all about economics…
- Significant decrease in correlation between DGI and consumption
& changes in saving rate variance display a picture where uncertainty
- n the future has increased to unpredictable levels in some EU
countries from 2007 onwards. No "classical" theories seem to be able to explain this.
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SLIDE 16
Eurostat
…
- A detailed comparison between "core" and "periphery" EU countries seems
to suggest that Europe going from pre-crisis convergence to long term divergence, as argued by Wunsch (2013).
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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
- 10%
- 5%
0% 5% 10% 15% 20% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Saving rate & GDI per capita gap: Cyprus and Sweden
GAP (right) Cyprus (left) Sweden (left)
SLIDE 17
Eurostat
…or not?
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SLIDE 18
Eurostat