Abstract
In this paper we analyse household holdings of the broad monetary aggregate M3 in the euro area from 1991 until 2009. Households are the largest money-holding sector in the euro area. We develop four models, two in nominal, two in real terms, with satisfactory economic and statistical properties. The main determinants are a transactions variable, wealth considerations, opportunity costs and uncertainty. In particular housing wealth is found to play an important role. The models are robust to different estimation strategies, samples considered and a multitude of misspecification tests. According to our analysis, it is quite apparent that in equilibrium, households jointly determine consumption and broad money holdings which are both influenced by wealth as well as interest rates. The importance of household money holdings for consumption expenditures may cast doubt on a purely passive role for money.
Recommended Citation
Seitz, Franz and von Landesberger, Julian
(2024)
"Household Money Holdings in the Euro Area: An Explorative Investigation,"
Journal of Banking and Financial Economics: Vol. 2014:
No.
2, Article 4.
DOI: 10.7172/2353-6845.jbfe.2014.2.4
Available at:
https://press.wz.uw.edu.pl/jbfe/vol2014/iss2/4
First Page
83
Last Page
115
Page Count
33
Received Date
21 May 2014
Revised Date
28 July 2014
Accept Date
27 October 2014
Online Available Date
19 November 2014
DOI
10.7172/2353-6845.jbfe.2014.2.4
JEL Code
E41; C32; D12
Publisher
University of Warsaw