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Perceived uncertainty as a key driver of household saving

Natalia Levenko ()

International Review of Economics & Finance, 2020, vol. 65, issue C, 126-145

Abstract: The paper studies the determinants of household saving in Europe with particular focus on the impact of labour income uncertainty. Panel data models are estimated on aggregate national-level data for 22 European countries in 1996–2017 using system GMM. The household saving rate is highly persistent and is driven in large part by income growth and by changes in labour income uncertainty, which can be dissected into two components: realised uncertainty and expectations about future uncertainty. Credit availability, interest rates, inflation, and other macroeconomic and expectational variables have little or no effect on saving.

Keywords: Household saving rates; Financial crisis; Labour income uncertainty; Precautionary saving; Consumer expectations; System GMM (search for similar items in EconPapers)
JEL-codes: E12 E21 E24 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.iref.2019.10.005

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Handle: RePEc:eee:reveco:v:65:y:2020:i:c:p:126-145