Michael Ziegelmeyer's research while affiliated with Central Bank Luxembourg and other places
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Publications (46)
We show that a substantial share of households contributes their own labour to the acquisition of their main residence. These contributions help households faced with credit constraints, since they reduce the need for external financing. We develop a simple theoretical model and show that own labour contributions decrease with the level of financia...
n 2019, Luxembourg introduced borrower-based instruments in the macro-prudential toolkit to constrain credit to households who exceed a certain limit on their loan-to-value ratio, on their (mortgage) debt-to-income ratio or on their debt service-to-income ratio. This paper analyses the impact of setting these limits at different levels, using house...
The rate of homeownership in Luxembourg is close to the OECD average. However, strong house price increases, mainly driven by population growth and limited housing supply, reduce housing affordability, in particular for the young, and contribute to the net wealth gap between homeowners and renters. As in many OECD countries, housing is the main ass...
This report presents the main results and underlying methodology of the third wave of the
Luxembourg Household Finance and Consumption Survey (LU-HFCS) and compares them to results obtained in the first and second wave in 2010 and 2014. This survey is conducted among private households resident in Luxembourg and is part of the Eurosystem Household...
Household participation in the stock market takes on new importance in the current context. Indeed, low inflation and interest rates close to zero reduce the return on bank deposits and induce households to seek alternative investments. Such financial decisions require a costly search for information. For this reason, households consult their frien...
This paper uses individual household data from Luxembourg to evaluate how severe economic conditions could affect bank exposure to the household sector. Using data from a representative survey, information on household income, expenses and liquid assets are used to calculate household-specific probabilities of default (PD), aggregate bank exposure...
Crossing institutional or regulatory boundaries often goes together with discontinuities, be it price, wage or indeed wealth discontinuities. This paper identifies substantial wealth differences between Luxembourg resident households and cross-border commuter households. The average (median) net wealth difference is estimated to be €367,000 (€129,0...
This report presents the methodology and main descriptive results of the second wave of the Cross-border Household Finance and Consumption Survey (XB-HFCS) conducted in 2014. The survey provides novel information on the economic and financial situation of households employed in Luxembourg but living in neighbouring countries (cross-border commuters...
We construct debt burden indicators at the level of individual households and calculate the share of households that are financially vulnerable using Luxembourg survey data collected in 2010 and 2014. The share of households that were indebted declined from 58.3% in 2010 to 54.6% in 2014, but the median level of debt (among indebted households) inc...
This paper provides novel evidence on the role of the macroeconomic environment for households’ choice between fixed-interest-rate and adjustable-interest-rate mortgages (ARMs) in the euro area. We find that relatively more ARMs are taken out when economic growth is strong, the interest rate spread is high, or unemployment shows low volatility. A s...
Results from the Eurosystem Household Finance and Consumption Survey reveal substantial variation in household net wealth across euro area countries that await explanation. This paper focuses on three main factors: i) homeownership, ii) housing value appreciation and iii) intergenerational transfers. We show that these three factors, in addition to...
This article contributes to our understanding of cross-border activity in general and the determinants
of cross-border trade in particular by focusing on the part of cross-border sales that arise
due to work-related cross-border crossings of households. We analyse empirically how crossborder
consumption expenditures vary across product and services...
We study saving motives and household saving behavior in fifteen euro-area countries using the first wave of the Household Finance and Consumption Survey that covers the years 2008–11. We find that precautionary saving is the most commonly reported motive in all countries, followed by saving for old-age provision. Preferences for other motives are...
This study investigates whether and how the crisis in 2008/2009 affects households’ risk attitudes, subjective risk and return expectations, and planned financial risk taking using the German SAVE study. Households’ wealth change from end-2007 to end-2009 is not found to have an effect. However, households that attribute losses to the crisis decrea...
Parents often face risk when making decisions on behalf of their children, since outcomes may affect child development. We perform an incentive-compatible field experiment using the Holt and Laury (Am Econ Rev 92(5):1644–1655, 2002) design to elicit parental risk preferences in a stewardship decision framework. Multivariate analysis using different...
We study the role of household saving behaviour, of individual motives for saving and that of perceived liquidity constraints in 15 Euro Area countries. The empirical analysis is based on the Household Finance and Consumption Survey, a new harmonized data set collecting detailed information on wealth holdings, consumption and income at the househol...
This paper analyses empirically how cross-border consumption varies across product and services categories and across household characteristics. It focuses on the part of crossborder sales that arise due to work-related cross-border crossings; it analyses the crossborder consumption behaviour of cross-border commuter households residing in Belgium,...
The recent financial crisis caused a shock to private wealth. Households with low financial literacy are less likely to own risky assets directly. Therefore, fewer of them report financial losses. More importantly, financially illiterate households are more prone to sell assets that have lost in value. Thereby losses become permanent, and these hou...
This study investigates whether and how the crisis in 2008/2009 affects households’ risk attitudes, subjective risk and return expectations, and planned financial risk taking using the German SAVE study. Households’ wealth change from end-2007 to end-2009 is not found to have an effect. However, households that attribute losses to the crisis decrea...
Financing pensions in the EU is a challenge. Many EU countries introduced private pension schemes to compensate declining public pension levels due to reforms made necessary by demographic change. In 2001, Germany introduced the Riester pension. Ten years after introduction the prevalence rate of this voluntary private pension scheme approximates 3...
Questions about monetary variables (such as income, wealth or savings) are key components of questionnaires on household finances. However, missing information on such sensitive topics is a well-known phenomenon which can seriously bias any inference based only on complete cases analysis. Many imputation techniques have been developed and implement...
We study how and to what extent private households are affected by the recent financial crisis and how their financial decisions are influenced by this shock. Our analysis reveals that individuals with low levels of financial literacy are less likely to have invested in the stock market and thus are less likely to report losses in wealth. Yet, indi...
While life-cycle theory makes the clear prediction that people dissave at old-age, this prediction is not at all borne out by the data from many countries. Various suggestions have been made to explain this discrepancy. This paper sheds more light on the effect of the exclusion of institutionalized individuals in estimating saving rates over old-ag...
Zusammenfassung Die Finanz- und Wirtschaftskrise hat sich zwar negativ auf den Wert von Vermögensanlagen ausgewirkt — aber nicht so stark,
wie allgemein angenommen wird. Die Dynamik in der Verbreitung der Riester-Verträge wurde allerdings durch die Krise gestoppt.
Einen leichten Rückgang gab es vor allem bei den mittleren oder höheren Einkommen, wo...
Since about ¾ of all self-employed are not secured by a mandatory pension plan, the question arises to what extent old-age poverty could become a problem for them. Therefore, a detailed study of how the self-employed save for their retirement seems necessary. The SAVE panel of 2005-2008 offers a new and so far unexploited data basis to assess the c...
The financial and economic crisis also left its mark on the privately funded old-age provision (Riester-Pension) in Germany: an analysis of the SAVE panel dataset shows that the coverage with Riester-contracts stagnated in 2008. Only households with low incomes exhibited small but positive growth of Riester-Pension coverage. The stagnation after a...
This study aims at estimating the losses in old-age wealth and forfeited returns. The analysis is based on the German SAVE study in 2008. In comparison to a scenario without the crisis individuals on average lost 4.3% of their financial wealth. Considering only wealth in investment classes specific for old-age provision the average loss is 2%. Comp...
Due to enormous losses of particular investment classes during the financial crisis in 2008 a lively debate about the risks related to privately funded old-age provision emerged. This study aims at estimating the losses in old-age wealth and forfeited returns. The analysis is based on the German SAVE study in 2008. We simulate the effects of the fi...
This paper documents the implementation of a logical imputation based on the panel structure of the 2003 to 2008 waves of the German SAVE dataset. A new release of the waves 2003-2008 will be available from June 2009. The concept and the principles of the underlying logical panel imputation are described. Furthermore, the method applied to logicall...
Die starken Verm�gensverluste einzelner Anlageklassen in 2008 durch die Finanz- und aufkommende Wirtschaftskrise f�hrte zu einer Diskussion �ber die Risiken der kapitalgedeckten Altersvorsorge. Diese Studie quantifiziert die H�he der Verm�gensverluste und Renditeeinbu�en durch die Finanz- und Wirtschaftskrise bei der kapitalgedeckten Altersvorsorge...
Da etwa � aller Selbst�ndigen nicht durch ein obligatorisches Altersvorsorgewerk abgesichert sind, stellt sich die Frage, inwieweit Altersarmut f�r diese Selbst�ndigen zum Problem werden k�nnte. Eine eingehende Untersuchung des Altersvorsorge-Verhaltens von Selbst�ndigen er-scheint daher notwendig. Das SAVE Panel von 2005-2008 bietet eine neue und...
Citations
... 1 An earlier version of this article was circulated under the title "Who lost the most? Financial Literacy, Cognitive Abilities and the Financial Crisis," see Bucher- Koenen and Ziegelmeyer (2011). 2 See, for example, Calvet et al. (2007); Lusardi and Mitchell (2007); Van Rooij, Lusardi, and Alessie (2011). ...
... This lower bound falls quickly for risk aversion levels up to two to three; for higher values, it plateaus. According to several studies [92][93][94], social network interactions ensure an impression on an individuals' participation in stock market. Such effects may be attributed to lower fixed participation costs as a result of lower information sharing costs. ...
... -Empirical studies and surveys for different countries suggest a greater propensity to liquidate financial assets before housing property -We found no literature on differences of these phenomena by income level (tiers). Campbell and Cocco, 2003Ehrmann and Ziegelmeyer, 2014BBVA, 2018 Source: Authors' elaboration ...
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... Bucks et al, (2009) studied that, the two most important saving motives were saving for retirement and saving for precautionary. The list of saving motives includes home purchase, other major purchases (other residences, vehicles, furniture, etc.), set up a private business or finance investments in an existing business, invest in financial assets, provide for unexpected events, provide for old-age, travels/holidays, education/support of children or grandchildren, bequests, and take advantage of state subsidies (for example, a subsidy to building society savings) (Michael, et al., 2015). ...
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... In the scope of this article, therefore, cross-border commuting is not to be considered as limited to work on the other side of the border. It is to be understood in more general terms as a synonym of mobility, encompassing other activities such as touristic travelling and cross-border shopping (Mathä et al., 2017). At the same time, the effects of cross-border commuting on families' relationships with people close to cross-border commuters (Telve, 2019), and processes of spatial integration in cross-border areas (Möller et al., 2018), add an extra layer of complexity to this theoretical analysis. ...
... According to Stantcheva (2020), among the most important individual factors shaping preferences for tax policy are the perceived benefits of redistribution and fairness views (alongside views about the government). A high and sustained increase in housing values has driven wealth accumulation in Luxembourg (Mathä et al., 2018). Respondents may perceive such gains as only partially 'deserved' (or fair) and may therefore view wealth taxation as more acceptable than a tax on income or consumption. ...
... In contrast, people with no formal or primary-level education are less likely than those with college/university education to experience any form of emotional distress. This could be because people with lower educational status were more likely to experience the precipitating factors for emotional stress prior to the pandemic [70][71][72] and may be less likely to experience worsening distress from the shocks of the pandemic. On the contrary, people with higher educational status may be more likely to experience a greater degree of emotional distress despite having weathered the pandemic under more favorable conditions and privileged economic circumstances [73]. ...
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... In a DSGE framework calibrated for Sweden, Chen and Columba (2016) find that a mix of macroprudential measures is needed to deliver the maximum welfare benefit. 7 Around one-third of households in Luxembourg rent their household main residence (Chen et al., 2020). Compared to homeowners, renters have lower income and wealth (Chen et al., 2021). ...
![[object Object]](https://i1.rgstatic.net/ii/profile.image/335470937559040-1456993912518_Q64/Giuseppe-Pulina.jpg)
... Methodologically, our analysis based on survey elicitation complements both administrative data and experimental research on social learning and social utility in important dimensions. Administrative data offer clear information on location and thus geographical proximity with potential peers, as well as detailed information on participation and holdings (see, for example, Kaustia and Knüpfer, 2012;Girshina et al., 2019;Haliassos et al., 2020 ). However, administrative data do not include information on subjective expectations, perceptions of past stock returns, or perceptions of peer information or behavior. ...
Reference: Informative social interactions
... Therefore, they should not just focus on households that are financially vulnerable today, but also on those that may become financially vulnerable under adverse economic conditions. We therefore implement the stress test framework in Giordana and Ziegelmeyer (2020) to simulate household balance sheets under adverse conditions. We compare the benign economic environment in 2018 to an adverse economic scenario featuring a household income shock consistent with a substantial increase in unemployment, comparable to those the Covid-19 pandemic triggered in several European countries. ...
