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The effects of consumption variability on saving: evidence from a panel of Muscovite households

Guariglia, Alessandra; & Kim, Byung-Yeon. (2003). The effects of consumption variability on saving: evidence from a panel of Muscovite households. Oxford Bulletin of Economics and Statistics, 65(3), 357-377.

Guariglia, Alessandra; & Kim, Byung-Yeon. (2003). The effects of consumption variability on saving: evidence from a panel of Muscovite households. Oxford Bulletin of Economics and Statistics, 65(3), 357-377.

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Due to the high uncertainty characterizing them, transition economies provide an extraordinary opportunity to test the precautionary saving hypothesis. This paper represents an attempt to exploit this opportunity. We use a panel of 2,346 Muscovite households, over the 12 months of 1996, to construct two time-varying measures of consumption growth variability, which we use as proxies for households’ perceived uncertainty. We then regress household saving on these uncertainty variables using a GMM-system estimator. We find that both uncertainty measures generally have a positive and statistically significant effect on saving. This result, which is robust to the use of different measures of saving, supports the precautionary saving hypothesis.




JOUR



Guariglia, Alessandra
Kim, Byung-Yeon



2003


Oxford Bulletin of Economics and Statistics

65

3

357-377






1468-0084

10.1111/1468-0084.t01-1-00049



1207