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

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.


Issue Date:
2011-08
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/115845
Total Pages:
27
JEL Codes:
D81; E21; Q50
Series Statement:
CCSD
62.2011




 Record created 2017-04-01, last modified 2017-08-26

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)