European Household Savings Dynamics: Under Inflation and Post-Pandemic Shocks
European Household Savings Dynamics: Under Inflation and Post-Pandemic Shocks

Summary/Abstract: The Covid-19 pandemic, which began in early 2020, triggered a global health and economic crisis, leading tounprecedented changes in consumer behaviour and the functioning of national economies. This article examinesthe impact of the pandemic and the subsequent inflationary crisis on household savings levels in selected Europeancountries. The analysis includes an assessment of household responses to changing macroeconomic conditions,such as inflation, interest rates, and household incomes, as well as the effectiveness of implemented monetaryand fiscal policies. The study employs a neural network model considering autoregressive relationships in a paneldata approach.The research covers data from 2000–2023 for fifteen European countries. The results indicate a two-phasereaction of households: an initial sharp increase in savings in the first year of the pandemic, followed by a declinein these values below projected levels. Four groups of countries with similar reaction trajectories were identified,highlighting the diversity in savings strategies. The study emphasizes the importance of flexibility in managingeconomic crises and adjusting policies to specific local conditions. These findings are crucial for policymakers,enabling the development of more effective strategies for responding to future economic crises.

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