Consumer Confidence and Household Saving Behaviors: A Cross-Country Empirical Analysis

The global financial crisis wreaked havoc on the European economy and dented consumer confidence. This paper exploits a panel dataset of 18 EU countries over the period 2001–2014 to examine whether this decrease in consumer confidence affected household sav-ing behaviors and if so, which specific sub-indicators of consumer sentiment played the most significant role. To tackle the issue of potential endogeneity between household sav-ing rates and consumer confidence, we use an instrumental variable approach. Our results suggest that confidence in household financial situations has a substantially larger effect on household saving than confidence in the general economic situation. Moreover, we find that the impact of consumer confidence on household saving has increased after the crisis, potentially due to a threshold effect.

Publication year:2020

Keywords:Precautionary saving, · Consumer confdence, · Household saving behaviors

BOF-keylabel:yes

IOF-keylabel:yes

BOF-publication weight:1

CSS-citation score:2

Authors from:Higher Education

Accessibility:Closed