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Does income uncertainty affect Spanish household consumption?

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  • Lugilde, Alba

Abstract

The aim of this paper is to study empirically the existence of precautionary saving in Spain using the micro data provided by the Spanish Survey of Household Finances. Using the panel component of these data I construct a measure of income risk, and use it to test for the strength of precautionary saving. I find that an increase of 1% in the standard deviation of income reduces household consumption by 5-7% depending on the specified model.

Suggested Citation

  • Lugilde, Alba, 2018. "Does income uncertainty affect Spanish household consumption?," MPRA Paper 87110, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:87110
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    income risk; precautionary saving; panel data;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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