IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Private Saving Rates and Macroeconomic Uncertainty: Evidence from Spanish Regional Data

  • Roberto Bande

    ()

  • Dolores Riveiro

    (GAME-IDEGA, Universidade de Santiago de Compostela)

In this paper we address the recent evolution of saving rates in the Spanish economy using regional data. The onset of the Great Recession has been followed by increasing saving rates, which may reflect precautionary behaviour of households. Thus, we test precautionary saving theory for a panel of Spanish regions in the period 1980-2007, using two different tests for consumption growth and for saving rate. We estimate a panel data model with regional fixed effects and test for the effects on consumption of uncertainty about future income, proxied by income volatility and unemployment rate, together with other variables such as income growth rate, disposable income, inflation rate, wealth to income ratios, domestic private credit and socio-demographic factors. Our preliminary results suggest that part of the large increase in savings rates is related to a precautionary motive and that increased uncertainty causes greater savings rates. Our results also suggest that, in the case of the Spanish economy, the unemployment rate is a relevant variable to measure future income uncertainty.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://otega.usc.es/docs_idega/documentos_de_traballo/irene/irene_4.pdf
Download Restriction: no

Paper provided by IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia in its series Documentos de trabajo - IRENe with number 0004.

as
in new window

Length: 25 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:edg:irenen:0004
Contact details of provider: Postal: Chalé dos Catedráticos, 1. Avda. das Ciencias s/n. Campus Vida, 15782 Santiago de Compostela
Phone: 981 59 11 66
Fax: 981 59 99 35
Web page: http://www.usc.es/idega/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Isabel Argimón & José Manuel González-Paramo & José María Roldan, 1993. "Ahorro, riqueza y tipos de interés en España," Investigaciones Economicas, Fundación SEPI, vol. 17(2), pages 313-332, May.
  2. Malley, James R & Moutos, Thomas, 1996. "Unemployment and Consumption," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 584-600, October.
  3. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  4. Joon-Ho Hahm & Douglas G. Steigerwald, 1999. "Consumption Adjustment under Time-Varying Income Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 32-40, February.
  5. DREZE, Jacques H. & MODIGLIANI, Franco, . "Cosumption decisions under uncertainty," CORE Discussion Papers RP -119, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Letendre, Marc-Andre & Smith, Gregor W., 2001. "Precautionary saving and portfolio allocation: DP by GMM," Journal of Monetary Economics, Elsevier, vol. 48(1), pages 197-215, August.
  7. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, August.
  8. Oriana Bandiera & Gerard Caprio Jr. & Patrick Honohan & Fabio Schiantarelli, 1998. "Does Financial Reform Raise or Reduce Savings?," Boston College Working Papers in Economics 413, Boston College Department of Economics.
  9. Mark Kazarosian, 1993. "Precautionary Savings- A Panel Study," Boston College Working Papers in Economics 247, Boston College Department of Economics.
  10. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
  11. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
  12. Christopher D Carroll, 1990. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," Economics Working Paper Archive 371, The Johns Hopkins University,Department of Economics, revised Aug 1996.
  13. Christopher D. Carroll, 1992. "How does future income affect current consumption?," Working Paper Series / Economic Activity Section 126, Board of Governors of the Federal Reserve System (U.S.).
  14. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
  15. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2011. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," CFS Working Paper Series 2011/27, Center for Financial Studies (CFS).
  16. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1992. "Earnings Uncertainty and Precautionary Saving," CEPR Discussion Papers 699, C.E.P.R. Discussion Papers.
  17. Jappelli, Tullio & Pagano, Marco, 1994. "Saving, Growth, and Liquidity Constraints," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 83-109, February.
  18. 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.
  19. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
  20. Ashoka Mody & Franziska Ohnsorge & Damiano Sandri, 2012. "Precautionary Savings in the Great Recession," IMF Economic Review, Palgrave Macmillan, vol. 60(1), pages 114-138, April.
  21. Charles Yuji Horioka & Akiko Terada-Hagiwara, 2011. "The Determinants and Long-term Projections of Saving Rates in Developing Asia," NBER Working Papers 17581, National Bureau of Economic Research, Inc.
  22. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  23. Dynan, Karen E, 1993. "How Prudent Are Consumers?," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1104-13, December.
  24. Peter Pedroni, 2004. "Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis," Department of Economics Working Papers 2004-15, Department of Economics, Williams College.
  25. Johan Lyhagen, 2001. "The effect of precautionary saving on consumption in Sweden," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 673-681.
  26. Roberto Bande Ramudo & Manuel Fernández Grela & Mª Dolores Riveiro García, 2011. "Consumption, Saving, Investment, and Unemployment. SVAR Tests of the Effects of Changes in the Consumption-Saving Pattern," Documentos de trabajo - Analise Economica 0045, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  27. 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.).
  28. Dynarski, Mark & Sheffrin, Steven M, 1987. "Consumption and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 411-28, May.
  29. Cheolbeom Park & Thomas Bishop, 2004. "Precautionary Saving, Borrowing Constraints, and Fiscal Policy," Econometric Society 2004 Far Eastern Meetings 706, Econometric Society.
  30. Janine Aron & John V. Duca & John Muellbauer & Keiko Murata & Anthony Murphy, 2012. "Credit, Housing Collateral, And Consumption: Evidence From Japan, The U.K., And The U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(3), pages 397-423, 09.
  31. Banerjee, Anindya, 1999. " Panel Data Unit Roots and Cointegration: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 607-29, Special I.
  32. Hahm Joon-Ho, 1999. "Consumption Growth, Income Growth and Earings Uncertainty: Simple Cross-Country Evidence," International Economic Journal, Taylor & Francis Journals, vol. 13(2), pages 39-58.
  33. Lyhagen, Johan, 1997. "The Effect of Precautionary Saving on Consumption in Sweden," Working Paper 58, National Institute of Economic Research.
  34. M. Menegatti, 2006. "Uncertainty and consumption: new evidence in OECD countries," Economics Department Working Papers 2006-EP08, Department of Economics, Parma University (Italy).
  35. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000. "What Drives Private Saving Across the World?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 165-181, May.
  36. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  37. Chris Carroll & Lawrence H. Summers, 1987. "Why Have Private Saving Rates in the United States and Canada Diverged?," NBER Working Papers 2319, National Bureau of Economic Research, Inc.
  38. Andrés J. Marchante & Bienvenido Ortega & Francisco Trujillo, 2001. "articles: Regional differences in personal saving rates in Spain," Papers in Regional Science, Springer, vol. 80(4), pages 465-482.
  39. Graham, John W., 1989. "International differences in saving rates and the life cycle hypothesis : Reply and further evidence," European Economic Review, Elsevier, vol. 33(7), pages 1499-1507, September.
  40. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
  41. Mario Menegatti, 2007. "Consumption and uncertainty: a panel analysis in Italian Regions," Applied Economics Letters, Taylor & Francis Journals, vol. 14(1), pages 39-42.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:edg:irenen:0004. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Manuel Fernandez Grela)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.