9/2018 Natalia Levenko. Actual and perceived uncertainty as drivers of household saving


Working Papers of Eesti Pank 9/2018

The paper studies the determinants of household saving in Europe with particular focus on the impact of labour income uncertainty. Panel data models are estimated on aggregate data for 24 European countries in 1996–2017 using system GMM. The household saving rate is highly persistent and is driven in large part by income growth but also by changes in labour income uncertainty, which can be dissected into its actual and perceived components. Wealth, credit availability, interest rates, and demographic variables have little or no effect on saving. 

JEL Codes: E12, E21, E24

Keywords: household saving rates, European Union, financial crisis, labour income uncertainty, precautionary saving, unemployment, consumer expectations, system GMM

The views expressed are those of the author and do not necessarily represent the official views of Eesti Pank, the European Central Bank or the Eurosystem.