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Huub Meijers, Joan Muysken, Olaf Sleijpen (2015) The deposit financing gap: another Dutch disease”, European Journal of Economics and Economic Policies: Intervention, vol. 12, n. 1, pp. 32-50


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.

Keywords: mortgage financing, retail funding gap, stock-flow consistent modelling

November 13, 2010 | Comments Closed