By Ben Norman, Maria Sebastia-Barriel and Olaf Weeken of the Bank’s International Economic Analysis Division.
Consumption in Germany, France and Italy (the EU3) has generally been thought to be less responsive to wealth effects than in the United Kingdom or the United States. The aim of this article is to assess the evidence for changes in the responsiveness of EU3 consumption to changes in equity prices, given the rapid increase in share prices in recent years and the rising share of financial assets held in equities during the 1990s.
Equity wealth and consumption - the experience of Germany, France and Italy