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Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks

Donatella Baiardi, Matteo Manera () and Mario Menegatti

No 115845, Climate Change and Sustainable Development from Fondazione Eni Enrico Mattei (FEEM)

Abstract: This paper studies the empirical relationship between consumption and saving under two different sources of uncertainty: financial risk and environmental risk. The analysis is carried out using time series data for six advanced economies in the period 1965-2007. The results support the theoretical conclusions that both financial risk alone and the interaction between financial and environmental risks affect consumption. Moreover, we suggest a solution to some shortcomings which concern the empirical analysis performed with one-argument utility functions. Finally, we provide new estimates of indexes of relative risk aversion and relative prudence, and relative preference of environmental quality.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 27
Date: 2011-08
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https://ageconsearch.umn.edu/record/115845/files/NDL2011-062.pdf (application/pdf)

Related works:
Journal Article: Consumption and precautionary saving: An empirical analysis under both financial and environmental risks (2013) Downloads
Working Paper: Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemcl:115845

DOI: 10.22004/ag.econ.115845

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