Buffer-Stock Saving and Households' Response to Income Shocks

Winfried Koeniger, Giulio Fella and Serafin Frache

No 1617, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: We use the Italian Survey of Household Income and Wealth, a rather unique dataset with a long time dimension of panel information on consumption, income and wealth, to structurally estimate a buffer-stock saving model. We exploit the information contained in the joint dynamics of income, consumption and wealth to quantify the degree of insurance against income risk. The estimated model implies that Italian households can insure between 89 and 95 percent of a transitory and between 7 and 9 percent of a permanent income shock. Compared to existing empirical estimates for the same dataset, our findings suggest that Italian households do not have access to significant insurance beyond self-insurance.

Keywords: Consumption; Wealth; Incomplete markets; Insurance (search for similar items in EconPapers)
JEL-codes: D91 E21 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2016-10
New Economics Papers: this item is included in nep-dge, nep-ias and nep-mac
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Downloads: (external link)
http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1617.pdf (application/pdf)

Related works:
Journal Article: BUFFER‐STOCK SAVING AND HOUSEHOLDS' RESPONSE TO INCOME SHOCKS (2020)
Working Paper: Buffer-stock saving and households' response to income shocks (2017)
Working Paper: Buffer-stock saving and households' response to income shocks (2017)
Working Paper: Buffer-stock saving and households' response to income shocks (2016)
Working Paper: Buffer-Stock Saving and Households' Response to Income Shocks (2016)
Working Paper: Buffer-Stock Saving and Households' Response to Income Shocks (2016)
Working Paper: Buffer-stock savings and households' wealth response to income shocks (2016)
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