UNCERTAINTY AND CONSUMPTION: NEW EVIDENCE IN OECD COUNTRIES

Mario Menegatti

Bulletin of Economic Research, 2010, vol. 62, issue 3, 227-242

Abstract: This work analyses the empirical evidence about precautionary saving in OECD countries in the period 1955–2000. Unlike the previous literature, we perform the test using a measure of uncertainty allowing for heterogeneity in stochastic processes which generate data for each country and selecting for each economy the autoregressive moving average process which best describes the series. The results obtained support the main conclusion of precautionary saving theory, showing that a greater degree of uncertainty increases saving. A less clear conclusion is obtained with reference to the effect of uncertainty on consumption growth, which does not seem to be strongly supported by the data.

Date: 2010
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https://doi.org/10.1111/j.1467-8586.2009.00316.x

Related works:
Working Paper: Uncertainty and consumption: new evidence in OECD countries (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:buecrs:v:62:y:2010:i:3:p:227-242

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