Consumption Adjustment under Changing Income Uncertainty

J.-H. Hahm and Douglas Steigerwald

Working Papers from Australian National University - Department of Economics

Abstract: We study the effect of income uncertainty on consumption in a model that includes precautionary saving. In contrast to previous studies, we focus on time-series variation in income uncertainty. Our time-series measure of income uncertainty is constructed from a panel of forecasts. We find evidence of precautionary saving in that increases in income uncertainty are related to increases in aggregate rates of savings.

Keywords: INCOME; UNCERTAINTY; CONSUMPTION (search for similar items in EconPapers)
JEL-codes: D91 E21 (search for similar items in EconPapers)
Pages: 27 pages
Date: 1998
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Citations: View citations in EconPapers (5)

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Working Paper: Consumption Adjustment under Changing Income Uncertainty (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:aunaec:345

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