On private consumption and uncertainty. Empirical evidence from Spanish regional data

Juan Nuñez Carrasco ()

INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, 2013, issue 25, 111-131

Abstract: This paper investigates the effect of uncertainty on household decisions regarding consumption. Based on Spanish regional data and taking as a theoretical reference precautionary saving models, we investigate whether macroeconomic uncertainty significantly affects household consumption. To analyze the potential association between these two factors, we used the predicted conditional volatility based on ARMA-GARCH models estimated on regional data. The results show that this measure of uncertainty has a significant effect on household consumption, especially when uncertainty is measured using an ADL model of past uncertainty. As an additional step, we attempt to identify regional patterns to account for the results.

Keywords: precautionary saving; uncertainty; Spanish regions (search for similar items in EconPapers)
JEL-codes: E20 E21 R10 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ris:invreg:0201

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