Report
Inconsistent time preferences in the euro zone
When we look at the behaviours of the various groups of economic agents in order to discern their time preference (we look at the United States and the euro zone), we see: A strong preference for the present among companies (high required return on equity, rapid restoration of earnings after recessions); A strong preference for the present among governments (high and rising public debt ratios); A strong preference for the present among households in the United States (relatively low savings rate), but a weak preference for the present among households in the euro zone (high savings rate). There is therefore an anomaly in the euro zone: governments and companies in the euro zone have not adapted to households’ weak preference for the present. This means that governments and companies in the euro zone pay insufficient heed to the long-term situation of the economy and the well-being of households.
Provider
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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