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Desempleo y Consumo en Chile

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  • Claudio Soto G.

Abstract

This article presents an empirical study of the effect of unemployment on aggregate consumption of nondurable goods in Chile for 1990-2002. Using an error-correction model, the results show that unemployment lags have a negative and statistically significant sort-run impact on consumption growth. Three hypotheses that relate unemployment and consumption are also analyzed. First, it is shown that unemployment is not a good predictor of future disposable income. Therefore, it does not signal changes in permanent income. Moreover, the results do not support the implications of the certainty-equivalence version of the permanent income hypothesis. Second, there is evidence that unemployment affects income volatility. Hence, the relationship between unemployment and consumption could be explained by the precautionary savings motive. However, for this mechanism to be consistent with the fact that unemployment has a negative impact on consumption growth, the effect of uncertainty on consumption must be persistent. Finally, there is also evidence that unemployment could affect consumption through its effect on income distribution. However, the latter result is not robust.

Suggested Citation

  • Claudio Soto G., 2004. "Desempleo y Consumo en Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 7(1), pages 31-50, April.
  • Handle: RePEc:chb:bcchec:v:7:y:2004:i:1:p:31-50
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    References listed on IDEAS

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    5. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1992. "Earnings uncertainty and precautionary saving," Journal of Monetary Economics, Elsevier, vol. 30(2), pages 307-337, November.
    6. Klaus Schmidt-Hebbel & Luis Serven, 2000. "Policy Shifts and External Shocks in Chile Under Rational Expectations," Econometric Society World Congress 2000 Contributed Papers 1098, Econometric Society.
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    8. Andrea Butelmann & Francisco Gallego, 2001. "Estimaciones de los Determinantes del Ahorro Voluntario de los Hogares en Chile (1988 Y 1997)," Working Papers Central Bank of Chile 97, Central Bank of Chile.
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    12. 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.).
    13. Lusardi, Annamaria, 1998. "On the Importance of the Precautionary Saving Motive," American Economic Review, American Economic Association, pages 449-453.
    14. Lusardi, Annamaria, 1997. "Precautionary saving and subjective earnings variance," Economics Letters, Elsevier, vol. 57(3), pages 319-326, December.
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    Cited by:

    1. Giorgio Fagiolo & Marco Valente, 2005. "Minority Games, Local Interactions, and Endogenous Networks," Computational Economics, Springer;Society for Computational Economics, vol. 25(1), pages 41-57, February.
    2. Andrés Solimano & Arístides Torche, 2008. "Income Distribution In Chile, 1987-2006: Analysis And Policy Considerations," Working Papers Central Bank of Chile 480, Central Bank of Chile.
    3. Rómulo Chumacero E., 2004. "Forecasting Chilean Industrial Production and Sales With Automated Procedures," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, pages 47-56.

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