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

Donatella Baiardi, Matteo Manera () and Mario Menegatti
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Donatella Baiardi: Department of Economics and Quantitative Methods, University of Pavia

No 2011.62, Working Papers from Fondazione Eni Enrico Mattei

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: Consumption; Precautionary Saving; Financial Risk; Environmental Risk; Prudence; Relative Risk Aversion; Uncertainty (search for similar items in EconPapers)
JEL-codes: D81 E21 Q50 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-env and nep-upt
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Related works:
Journal Article: Consumption and precautionary saving: An empirical analysis under both financial and environmental risks (2013)
Working Paper: Consumption and Precautionary Saving: An Empirical Analysis under Both Financial and Environmental Risks (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2011.62

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