FEEM working papers "Note di lavoro" series
2011 .062

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


Authors: Donatella Baiardi, Matteo Manera, Mario Menegatti
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Consumption, Precautionary Saving, Financial Risk, Environmental Risk, Prudence, Relative Risk Aversion, Uncertainty
JEL n.: D81, E21, Q50
JEL: Economic Modelling 2013 Vol.30
Pages: pp.157-166
Date: 01/2013

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.

***

Suggested citation: Donatella Baiardi, Matteo Manera, Mario Menegatti, Consumption and precautionary saving: An empirical analysis under both financial and environmental risks, Economic Modelling, Volume 30, January 2013, Pages 157-166, ISSN 0264-9993, http://dx.doi.org/10.1016/j.econmod.2012.09.006

Download file
Download PDF file

FEEM Update

Subscribe to stay connected.

Your personal data will be processed by Fondazione Eni Enrico Mattei. – data Controller – with the aim of emailing the FEEM newsletter. The use of Your email address is necessary for the implementation of the newsletter service. You are invited to read the Privacy Policy in order to obtain additional information about the protection of Your rights.

This Website uses technical cookies and cookie analytics, as well as “third party” profiling cookies.
If you close this banner or you decide to continue navigating on this Website, you express consent to the use of cookies. If you need additional information or you wish to express selective choices on the use of cookies, please refer to the   Cookie PolicyI agree