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.

Manera, M., Baiardi, D., & Menegatti, M. (2011). Consumption and precautionary saving: an empirical analysis under both financial and environmental risks [Working paper].

Consumption and precautionary saving: an empirical analysis under both financial and environmental risks

MANERA, MATTEO;
2011

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.
Working paper
No
Scientifica
Consumption; Precautionary saving; Financial risk; Environmental risk; Prudence; Relative risk aversion; Uncertainty
English
Manera, M., Baiardi, D., & Menegatti, M. (2011). Consumption and precautionary saving: an empirical analysis under both financial and environmental risks [Working paper].
Manera, M; Baiardi, D; Menegatti, M
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10281/28937
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