Consumption behaviour and financial crisis in the Netherlands

The focus of this paper in on the effect that changes in income and financial assets have on household consumption in the Netherlands over the period 2009-2012. The empirical evidence is based on the LISS panel, a longitudinal survey representative of the Dutch-speaking population conducted and administrated by CentERdata at Tilburg University. We find a point estimate of the marginal propensity to consume (MPC) of 0.21 out of household income, that is in line with the international microeconomic evidence. We also find that less fragile households display a double MPC out of income than those more fragile (0.44 vs 0.21, respectively). The point estimate of the MPC out of total financial assets equals 0.04. We also find support of the fact that the MPC out of wealth is smaller for richer households.

Keywords: Marginal propensities to consume, consumption behavior, survey data.
JEL classification: E21, D12, D91.

Working paper no. 453