Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209137 
Year of Publication: 
2019
Series/Report no.: 
CFS Working Paper Series No. 637
Publisher: 
Goethe University Frankfurt, Center for Financial Studies (CFS), Frankfurt a. M.
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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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