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A note on welfare and the economic shocks

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  • Nicoletta Rosati

    (Cemapre and ISEG - Technical University of Lisbon)

Abstract

The behaviour of the permanent and transitory economic shocks for different levels of household's welfare is studied using both consumption and income measures. After testing for heteroskedasticity of the economic shocks, we use local polynomial regression models to estimate the variance of the shocks conditional on welfare level. Italian data covering the period 1980-2004 show evidence of heteroskedasticity of both the transitory and the permanent economic shocks, with the poor experiencing higher variances. The permanent shocks seem to have a more uniform effect at all welfare levels.

Suggested Citation

  • Nicoletta Rosati, 2009. "A note on welfare and the economic shocks," Economics Bulletin, AccessEcon, vol. 29(3), pages 1621-1630.
    • Handle: RePEc:ebl:ecbull:eb-08i30024
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    References listed on IDEAS

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    1. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-467, June.
    2. Andrea Brandolini & Luigi Cannari & Giovanni D’Alessio & Ivan Faiella, 2006. "Household Wealth Distribution in Italy in the 1990s," Chapters, in: Edward N. Wolff (ed.), International Perspectives on Household Wealth, chapter 7, Edward Elgar Publishing.
    3. Andrea Brandolini & Piero Cipollone & Paolo Sestito, 2001. "Earnings Dispersion, Low Pay and Household Poverty in Italy, 1977-1998," Temi di discussione (Economic working papers) 427, Bank of Italy, Economic Research and International Relations Area.
    4. Richard Blundell & Ian Preston, 1998. "Consumption Inequality and Income Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 603-640.
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    More about this item

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • D1 - Microeconomics - - Household Behavior

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