Precautionary saving and income uncertainty in Germany - new evidence from microdata

Nikolaus Bartzsch

No 2006,44, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank

Abstract: The saving ratio of households in Germany has increased in the past few years when the income trend was weak. This could be due to precautionary saving. In this paper, the importance of precautionary saving against income uncertainty is analyzed empirically using micro data from the German Socio- Economic Panel Study (GSOEP). Wealth in 2002 is regressed on alternative measures of income uncertainty in a cross-section of households. In addition to the usual controls, risk aversion is also taken into account. When using net financial wealth, precautionary saving is statistically significant and economically quite important. The share of precautionary net financial wealth in total aggregate net financial wealth is on average about 20%. Compared with net financial wealth, housing wealth is not used as a buffer stock against income uncertainty, confirming the hypothesis that this kind of asset is rather illiquid.

Keywords: precautionary saving; precautionary wealth; buffer-stock model (search for similar items in EconPapers)
JEL-codes: D91 E21 J24 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Precautionary Saving and Income Uncertainty in Germany – New Evidence from Microdata (2008)
Working Paper: Precautionary Saving and Income Uncertainty in Germany: New Evidence from Microdata (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdp1:5193

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