Does consumption respond to predicted increases in cash-hand availability?: Evidence from the Italian "severance pay"

Margherita Borella, Elsa Fornero and Mariacristina Rossi

Economics Letters, 2009, vol. 105, issue 1, pages 127-129

Abstract: We examine whether Italian household consumption exhibits excess sensitivity to "severance pay", a sizable lump-sum that workers receive at job termination. We find no evidence of excess sensitivity of non-durable expenditure to this anticipated cash-in-hand change.

Keywords: Life-cycle; Euler; equation; Excess; sensitivity; Severance; pay (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:ecolet:v:105:y:2009:i:1:p:127-129

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