FEEM working papers "Note di lavoro"
Date: 08/2016

The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries

Authors: Donatella Baiardi, Matteo Manera, Mario Menegatti
Type: Journal
JEL n.: Q50, D81, E21
JEL: Environment and Development Economics
Pages: Volume 21, Issue 04, pp 439-463
Keywords: Consumption, Environmental Risk, Financial Risk, Prudence, Relative Risk Aversion, Relative Preference for the Quality


This paper empirically estimates a micro-founded model which studies the macroeconomic impact of environmental and financial risks on consumption choices in the Mediterranean Region. The analysis is carried out using time series aggregate data for fourteen Mediterranean countries over the period 1965-2008. Our results indicate that both risks and their interaction significantly influence consumption dynamics. Our estimates of the indexes of relative risk aversion and relative prudence, as well as the relative preference for the quality of environment suggest marked cross-country heterogeneity.


Suggested citation: Baiardi, D., M. Manera, M. Menegatti, (2014), 'The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries', Environment and Development Economics / Volume 21 / Issue 04 / August 2016, pp 439-463

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