Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215139 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12743
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper quantifies the extent of heterogeneity in consumption responses to changes in real interest rates and house prices in the four largest economies in the euro area: France, Germany, Italy, and Spain. We first calibrate a life-cycle incomplete-markets model with a financial asset and housing to match the large heterogeneity of households asset portfolios, observed in the Household Finance and Consumption Survey (HFCS) for these countries. We then show that the heterogeneity in household finances implies that responses of consumption to changes in the real interest rate and in house prices differ substantially across countries, and within countries by household characteristics such as age, housing tenure, and asset positions. The different consumption responses quantified in this paper point towards important heterogeneity in monetary-policy transmission in the euro area.
Subjects: 
european household portfolios
consumption
monetary policy transmission
international comparative finance
housing
JEL: 
D14
D15
D31
E21
E43
G11
Document Type: 
Working Paper

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