Abdul Jalil, Ahmad Zafarullah (2009): The importance of precautionary saving motive among Indonesian households. Published in: Journal of Indonesian Economy and Business , Vol. 24, No. 2 (2009): pp. 221-231.
Download (220kB) | Preview
In the developing world, the population is frequently faced with numerous natural, economic, institutional and market risks. Because of these uncertainties, many individuals and households experience difficult periods of unexpected reduction in income. Using panel data from the Indonesian Family Life Survey (IFLS), this paper tests the existence of precautionary saving associated with income risk in Indonesia. The results of the estimation show that the uncertainty variable is not significantly related to the growth of consumption which signifies that Indonesian households do not constitute precautionary saving to smooth their consumption. The finding may be explained by the fact that Indonesian households have in their possession other type of support mechanisms based particularly on inter-generational and -communal solidarity.
|Item Type:||MPRA Paper|
|Original Title:||The importance of precautionary saving motive among Indonesian households|
|Keywords:||Uncertainty; Income Risks; Precautionary Savings|
|Subjects:||D - Microeconomics > D1 - Household Behavior and Family Economics > D13 - Household Production and Intrahousehold Allocation
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
D - Microeconomics > D9 - Intertemporal Choice > D91 - Intertemporal Household Choice ; Life Cycle Models and Saving
|Depositing User:||Ahmad Zafarullah Abdul Jalil|
|Date Deposited:||20. Sep 2010 16:45|
|Last Modified:||05. Jan 2016 06:26|
Albaran, P., 2000. “Income uncertainty and precautionary saving: evidence from household rotating panel data”. CEMFI Working Paper Series.
Banks, J., R. Blundell, and A. Brugiavini, 1999. “Risk pooling, precautionary saving and consumption growth”. The Institute for Fiscal Studies Working Paper Series W99/19,.
Bauer, P.T. and F.W. Paish, 1952. “The reduction of fluctuations in the incomes of primary producers”. Economic Journal 62 (248), 750-780.
Blundell, R. and T. Stoker, 1998. “Consumption and the Timing of Income Risk”. European Economic Review, 43(3), 475-507.
Browning, M. and A. Lusardi, 1996. “Household saving : Micro theories and micro facts”. Journal of Economic Litterature, 34, 1797-1855.
Caballero, R., 1991. “Earning uncertainty and aggregate wealth accumulation. American Economic Review, 81, 859-871.
Carroll, C.D., 1992. “The buffer-stock theory of saving: Some macroeconomic evidence”. Brookings Papers Econ .Activity, no. 2, 61-156.
__________,1994. “How does future income affect current consumption?”. Quarterly Journal of Economics,109(1),111−147.
__________, 2001. “A theory of the consumption function, with and without the liquidity constraints (expandedversion)”. NBER Working Paper Series, no.8387.
Caroll, C.D. and A.A. Samwick, 1995. “How important is precautionary saving”. NBER Working Paper Series, no. 5194.
Carroll, C., K. Dynan, and S. Krane, 1999. “Unemployment Risk and precautionary wealth: Evidence from households. balance sheets.” Fed Mimeo.
Dardoni, V., 1991. “Precautionary savings under income uncertainty: A cross section analysis”. Applied Economics, 23, 153-160.
Deaton, A., 1992. Understanding consumption. Oxford: Clarendon Press.
Dynan, K.E., 1993. “How prudent are Consumers?”. The Journal of Political Economy, 101(6), 1104-1113.
Fisher, M.R., 1956. “Explorations in saving behaviour”. Oxford University Institute of Statistics Bulletin, 201-77.
Friedman, M., 1957. A Theory of the consumption function. Princeton: Princeton University Press.
Guariglia, A., 1998. “Understanding saving behavior in the UK: Evidence from the BHPS”. University of Essex, Mimeo.
Guiso, L., T. Jappelli, and D. Terlizzese, 1992. “Earnings uncertainty and precautionary saving”. Journal of Monetary Economics, 30, 307-337.
Kazarosian, M., 1997. “Precautionary saving - A panel study”. Review of Economics and Statistics, 79, 1997, 241-247.
Kennickell A. and A. Lusardi, 2001. “Is the precautionary motive really important?”. Paper presented at NBER 2001 Summer Institute.
Kimball, M.S., 1990. Precautionary saving in the small and in the large. Econometrica, 58, 53-73.
Kuehlwein, M., 1991. A test for the presence of precautionary saving. Economics Letters 37, 471-75.
Leland, H.E., 1968. “Saving and uncertainty: The precautionary demand for saving”. Quarterly Journal of Economics, 465-73.
Lusardi, A. 1998. “On the importance of precautionary saving”. AER papers and proceedings, 88(2).
Lusardi, A. 2000. “Precautionary saving and the accumulation of wealth”. University of Chicago, Mimeo.
Miller, B.L. 1974. “The effect on optimal consumption of increased uncertainty in labor income in the multiperiod case”. Mimeo.
Merrigan, P. and M. Normandin, 1996. “Precautionary Saving Motives: An Assessment from UK Time Series of Cross-Sections”. Economic Journal, 106, 1193-1208.
Sibley, D.S. (1975). “Permanent and transitory income effects in a model of optimal consumption with wage income uncertainty”. Journal of Economic Theory, 11, 68-82.
Skinner, J. 1987. “Risky income, life cycle consumption and precautionary savings”. NBER Working Paper Series, no. 2336.
Zeldes, S. P. 1989. “Consumption and liquidity constraint: an empirical investigation”. Journal of Political Economy, 97 (2), 305-346.