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Saving from Permanent and Transitory Income. The Case of Polish Households

Author

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  • Zofia Barbara Liberda
  • Brunon Górecki
  • Marek PÄ™czkowski

Abstract

The paper analyses the impact of income uncertainty on household saving. Using a panel of Polish households for 1997-2000 we decompose uncertainty of household income into a variance of shocks to permanent income and a variance of shocks to transitory income. Then we regress households' savings onthe estimated measures of income uncertainty controlling for demographicand social variables. Our empirical results indicate that the average variances of permanent and transitory income of Polish households do not differ much. Both measures of income uncertainty are statistically significant in predicting saving. The permanent income uncertainty affects savings more than the uncertainty of transitory income. A significant part of households' saving in Poland may be of precautionary, buffer-stock character. This paper is the CHER (Consortium of the Household Panels for European Socio-economic Research) Working Paper, 2003, No. 15, presented at the 28th General Conference of the International Association for Research in Incomeand Wealth in Cork, Ireland in 2004 and at the CHER workshop in Spain, 2002. It is a companion paper to: Uncertainty of Households' Income in the European Union Countries and Poland., co-authored by B. Liberda, B. Górecki andM. Pęczkowski, that was published in EMERGO, 4(38)/2003 and appeared also as CHER Working Paper, 2003, No. 13, within the program Improving the Human Research Potential and the Socio-Economic Knowledge Base, supportedby the European Commission. In preparing both papers we benefited from the grant by the Polish NationalCommittee for Scientific Research (KBN) for years 2001.2003, No. 5.1.102C 051

Suggested Citation

  • Zofia Barbara Liberda & Brunon Górecki & Marek PÄ™czkowski, 2004. "Saving from Permanent and Transitory Income. The Case of Polish Households," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 14.
  • Handle: RePEc:eko:ekoeko:14_7
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    Cited by:

    1. Zofia Barbara Liberda, 2007. "Income Preferences and Household Savings," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 9, pages 19-30.
    2. Barbara Liberda & Katarzyna Sałach & Marek Pęczkowski, 2023. "The Effects of Child Benefit on Household Saving," Journal of Family and Economic Issues, Springer, vol. 44(2), pages 447-460, June.
    3. Marek Pęczkowski & Barbara Liberda, 2013. "Households’ saving mobility in Poland," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 14(2), pages 273-286, June.
    4. Arkadiusz Florczak & Janusz Jabłonowski, 2016. "Consumption over the life cycle in Poland," NBP Working Papers 252, Narodowy Bank Polski.

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