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The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries

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  • Donatella Baiardi

    (Department of Economics, Management and Statistics, University of Milano-Bicocca, Italy)

  • Matteo Manera

    (Department of Economics, Management and Statistics, University of Milano-Bicocca and Fondazione Eni Enrico Mattei, Italy)

  • Mario Menegatti

    (Department of Economics, University of Parma, Italy)

Abstract

This paper empirically estimates a micro-founded model which studies the macroeconomic impact of environmental and financial risks on consumption choices in the Mediterranean Region. The analysis is carried out using time series aggregate data for fourteen Mediterranean countries over the period 1965-2008. Our results indicate that both risks and their interaction significantly influence consumption dynamics. Our estimates of the indexes of relative risk aversion and relative prudence, as well as the relative preference for the quality of environment suggest marked cross-country heterogeneity.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2014.43.

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Date of creation: Apr 2014
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Handle: RePEc:fem:femwpa:2014.43

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Keywords: Consumption; Environmental Risk; Financial Risk; Prudence; Relative Risk Aversion; Relative Preference for the Quality of Environment;

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