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Consumption and uncertainty: a panel analysis in Italian Regions

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  • Mario Menegatti

Abstract

This work tests precautionary saving theory in Italian regions, examining the relationship between consumption growth and income uncertainty in a panel of five-year averages in the period 1981 to 2000. The analysis used two different measures for income uncertainty. The first is a naive measure given by the variance of GDP growth rates while the second is a more sophisticated one obtained by computing the conditional variance by means of the expectation of GDP growth. This expectation is obtained by using the best ARMA process for each region. The results obtained confirm the importance of the precautionary saving motive in consumption decisions.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

Volume (Year): 14 (2007)
Issue (Month): 1 ()
Pages: 39-42

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Handle: RePEc:taf:apeclt:v:14:y:2007:i:1:p:39-42

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References

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  1. Antonello Scorcu, 1998. "Consumption risk-sharing in Italy," Applied Economics, Taylor & Francis Journals, vol. 30(3), pages 407-414.
  2. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1992. "Earnings Uncertainty and Precautionary Saving," CEPR Discussion Papers 699, C.E.P.R. Discussion Papers.
  3. Dynan, Karen E, 1993. "How Prudent Are Consumers?," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1104-13, December.
  4. Karen E. Dynan, 1993. "How prudent are consumers?," Working Paper Series / Economic Activity Section 135, Board of Governors of the Federal Reserve System (U.S.).
  5. Lyhagen, Johan, 1997. "The Effect of Precautionary Saving on Consumption in Sweden," Working Paper 58, National Institute of Economic Research.
  6. Menegatti, Mario, 2001. "On the Conditions for Precautionary Saving," Journal of Economic Theory, Elsevier, vol. 98(1), pages 189-193, May.
  7. Alessandra Guariglia & Byung-Yeon Kim, 2003. "The Effects of Consumption Variability on Saving: Evidence from a Panel of Muscovite Households," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(3), pages 357-377, 07.
  8. Johan Lyhagen, 2001. "The effect of precautionary saving on consumption in Sweden," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 673-681.
  9. Hahm, J.-H. & Steigerwald, D.G., 1998. "Consumption Adjustment under Changing Income Uncertainty," Papers 345, Australian National University - Department of Economics.
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Citations

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Cited by:
  1. Bande, Roberto & Riveiro, Dolores, 2012. "The Consumption-Investment-Unemployment Relationship in Spain: an Analysis with Regional Data," MPRA Paper 42681, University Library of Munich, Germany.
  2. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2011. "Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks," Working Papers 2011.62, Fondazione Eni Enrico Mattei.
  3. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Working Papers 2014.43, Fondazione Eni Enrico Mattei.
  4. Garz, Marcel, 2014. "Consumption, labor income uncertainty, and economic news coverage," MPRA Paper 56076, University Library of Munich, Germany.
  5. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Working Papers 271, University of Milano-Bicocca, Department of Economics, revised Apr 2014.
  6. Bande, Roberto & Riveiro, Dolores, 2012. "Private Saving Rates and Macroeconomic Uncertainty: Evidence from Spanish Regional Data," MPRA Paper 42647, University Library of Munich, Germany.

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