Elasticity of intertemporal substitution in the euro area

Michal Marenčák, Giang Nghiem

This paper estimates the elasticity of intertemporal substitution for the euro area. It leverages the unique design of the Consumer Expectations Survey in Europe to directly infer it from the Euler equation. Our final estimates range between 0.7 and 0.8 for the euro area as a whole, which are higher than those for the US. We also observe economically sizeable heterogeneity across the member states, and over time. Belgium, Germany, and the Netherlands have lower elasticity compared to France, Spain, and Italy. The implications are discussed.

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Year of publication:	[2024]
Authors:	Marenčák, Michal ; Giang Hong Nghiem
Publisher:	[Hannover] : [Wirtschaftswissenschaftliche Fakultät der Leibniz Universität Hannover]
Subject:	inflation \| expectations \| consumption \| intertemporal elasticity of substitution \| Euler equation \| Consumer Expectations Survey \| Substitutionselastizität \| Elasticity of substitution \| Eurozone \| Euro area \| Inflationserwartung \| Inflation expectations \| Konsumtheorie \| Consumption theory \| Privater Konsum \| Private consumption \| Variationsrechnung \| Variational method \| Konsumentenverhalten \| Consumer behaviour \| Intertemporale Entscheidung \| Intertemporal choice \| EU-Staaten \| EU countries \| Inflation \| Schätzung \| Estimation \| Erwartungsbildung \| Expectation formation \| Geldpolitik \| Monetary policy

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Extent:	1 Online-Ressource (circa 34 Seiten) Illustrationen
Series:	Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät / Wirtschaftswissenschaftliche Fakultät, Universität Hannover : Hannover economic papers (HEP). - Hannover : Wirtschaftswiss. Fak., Univ., ZDB-ID 2120102-X. - Vol. [Nummer 725 (Aug 2024)]
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/307739 [Handle]
Classification:	D12 - Consumer Economics: Empirical Analysis ; d15 ; D84 - Expectations; Speculations ; E21 - Consumption; Saving
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10015152737