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Title:Consumption and precautionary saving: An empirical analysis under both financial and environmental risks PDF Logo
Authors:Baiardi, Donatella
Manera, Matteo
Menegatti, Mario
Issue Date:2011
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: Climate Change and Sustainable Development 62.2011
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.
Subjects:Consumption
Precautionary Saving
Financial Risk
Environmental Risk
Prudence
Relative Risk Aversion
Uncertainty
JEL:D81
E21
Q50
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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