The deposit financing gap: another Dutch disease

H.H.M. Meijers, J. Muysken, O.C.H.M. Sleijpen

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

In the last 2 decades, the Netherlands has experienced an increase in real-estate prices, accompanied by an increase in mortgages and a marked decline in household savings. As a consequence, banks are faced with a large retail funding gap: outstanding mortgage debt is insufficiently matched by retail deposits, whereas other funding possibilities of banks have increasingly been constrained - also due to their large foreign exposures.

Traditional macroeconomic models cannot analyse this phenomenon appropriately as they lack a proper model of the financial sector and underestimate the potential for interactions between the monetary and the real sphere. We present a stock-flow consistent approach developed by Godley and Lavoie as a valuable alternative to traditional and New Keynesian macroeconomic models, enabling us to analyse the deposit financing gap for the Netherlands.
Original languageEnglish
Pages (from-to)32-50
JournalEuropean Journal of Economics and Economic Policies: Intervention
Volume12
Issue number1
DOIs
Publication statusPublished - 1 Jan 2015

Cite this