Consumption Smoothing Channels Within And Between Households

Simone Tedeschi, Luigi Ventura and Pierfederico Asdrubal
Authors registered in the RePEc Author Service: Pierfederico Asdrubali

No 246, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: This paper aims to fill the gap on the analysis of consumption smoothing/risksharing channels at the micro level, both within and across households. Using data from the Bank of Italy’s Survey on Household Income and Wealth covering the finan- cial crisis, we are able to quantify in a unified and consistent framework several risksharing mechanisms that so far have been documented separately. We find that Italian households were able to smooth about 83% of shocks household head’s earnings in 2008-2010, a fraction rising to almost 87% in 2010-2012. The most im- portant smoothing mechanisms turns out to be self-insurance through saving/dis- saving and within-household risksharing Interestingly, risksharing through port- folio diversification and private transfers are rather limited, but the overall degree of shock absorption occurring through private risksharing channels hovers around two thirds, as opposed to around one fifth of a shock cushioned by public transfers and taxes.

Keywords: Household Risksharing; Precautionary Saving; Consumption Smoothing; Income Smoothing. (search for similar items in EconPapers)
JEL-codes: C31 D12 E21 (search for similar items in EconPapers)
Pages: 40
Date: 2019-05
New Economics Papers: this item is included in nep-bec, nep-eur and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:rtr:wpaper:0246

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