Does income uncertainty affect Spanish household consumption?

Lugilde, Alba (2018): Does income uncertainty affect Spanish household consumption?

Abstract

The aim of this paper is to study empirically the existence of precautionary saving in Spain using the micro data provided by the Spanish Survey of Household Finances. Using the panel component of these data I construct a measure of income risk, and use it to test for the strength of precautionary saving. I find that an increase of 1% in the standard deviation of income reduces household consumption by 5-7% depending on the specified model.

• Item Type: MPRA Paper
• Language: English
• Keywords: income risk; precautionary saving; panel data
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Household Saving; Personal Finance; D - Microeconomics > D9 - Intertemporal Choice > D91 - Intertemporal Household Choice ; Life Cycle Models and Saving

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