European Parliament Library

After the Crisis, Lower Consumption Growth but Narrower Global Imbalances?, Ashoka Mody and Franziska Ohnsorge

We estimate consumption dynamics in the G-7 economies, paying particular attention to the possibility of precautionary behavior in the face of uncertainty. We find that in the short run, continued income uncertainty will significantly dampen consumption growth. As such, consumption in the G-7 economies is unlikely to be the engine that revives global growth. Differences in the pace and timing of consumption moderation have implications for the evolution of global imbalances. With the U.S. experiencing a sharper rise in unemployment and, perhaps, more widespread loss of financial wealth than elsewhere in the G-7, the relative rise of the U.S. savings rate is helping narrow global imbalances. But with a likely earlier recovery in the U.S., this narrowing could be short-lived. Moreover, long-term differences- in economic and financial volatility and in demographic structures-have been an important source of the imbalances and could soon reassert their prominence
Table Of Contents
Contents; I. Introduction; II. Precautionary Behavior; III. Wealth Effects; IV. Does Financial Volatility Matter?; V. Working-Age Population; VI. Interpreting the Results; References; Data Appendix; Data Definitions and Sources; Tables; 1. Precautionary Behavior; 2. Consumption Growth in G-7 and Non-G-7 Countries: 1-Year and 3-Year Horizons; 3. Wealth Effects; 4. Does Financial Volatility Matter?-G-7 Economies; 5. Working Age Population; Appendix Tables; A. Robustness to Full Country Sample; B. Robustness to G-7 Country Sample; Figures; 1. Long-Term Differences in Savings Rates
Literary Form
non fiction
First edition.
Description based upon print version of record
Physical Description
1 online resource (33 p.)
Specific Material Designation
Form Of Item

Library Locations

  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR