Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249906 
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2633
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We study the relationship between fiscal policy and household saving across the euro area countries for the period 1999-2019. To this extent, we propose a thick modelling approach, which allows a vast number of model specifications in a dynamic panel setting. We find that fiscal expansions are associated with an increase in household saving rate in the euro area, which supports a partial, but not full, Ricardian equivalence channel. The relationship holds regardless of how we measure the (discretionary) fiscal policy impulse. The median saving offset across all baseline specifications is around 19% in the short run and 41% in the long run. Various robustness checks underpin the basic results, while also pointing to model and estimation uncertainty and no robust evidence for total private saving offset. Our results for the euro area are broadly in line with the literature, albeit they tend to yield a somewhat weaker evidence for the saving offset of fiscal policy, particularly in relation to earlier studies.
Subjects: 
household saving
fiscal policy
national budget
deficit and debt
JEL: 
D14
E62
H6
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4920-0
Document Type: 
Working Paper

Files in This Item:
File
Size
899.88 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.