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Does income uncertainty affect Spanish household consumption?

Alba Lugilde

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to study empirically the existence of precautionary saving in Spain using the micro data provided by the Spanish Survey of Household Finances. Using the panel component of these data I construct a measure of income risk, and use it to test for the strength of precautionary saving. I find that an increase of 1% in the standard deviation of income reduces household consumption by 5-7% depending on the specified model.

Keywords: income risk; precautionary saving; panel data (search for similar items in EconPapers)
JEL-codes: D12 D14 D91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur
Date: 2018-06-04
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