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

Author

Listed:
  • 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.

Suggested Citation

  • Donatella Baiardi & Matteo Manera & Mario Menegatti, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Working Papers 2014.43, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2014.43
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    More about this item

    Keywords

    Consumption; Environmental Risk; Financial Risk; Prudence; Relative Risk Aversion; Relative Preference for the Quality of Environment;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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