Precautionary Saving in Spain during the Great Recessionevidence from a panel of uncertainty indicators

  1. Alba Lugilde Sánchez 1
  2. Roberto Bande Ramudo 1
  3. María Dolores Riveiro García 1
  1. 1 usc
Revista:
Documentos de Traballo. Análise Económica

ISSN: 1138-0713

Ano de publicación: 2016

Número: 61

Páxinas: 1-26

Tipo: Documento de traballo

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Outras publicacións en: Documentos de Traballo. Análise Económica

Resumo

The aim of this paper is to study empirically the effect of uncertainty on private consumption using a sample of Spanish households, and to check whether the appropriate measure of uncertainty varies with the macroeconomic context. Using data provided by the Spanish Survey of Household Finances (EFF) and the Labour Force Survey (LFS) we construct several uncertainty measures commonly used in the literature and an additional indicator based on job insecurity data and estimate different econometric models under the lifecycle/permanent income hypothesis, using these measures of uncertainty. Our results are twofold: first, we find evidence in favour of the precautionary saving hypothesis. Secondly, we find that the sources of uncertainty vary with the business cycle: the job insecurity indicator is an appropriate variable to approximate income uncertainty in any macroeconomic context, especially when the unemployment rate is low. When unemployment soars, however, it becomes the main uncertainty source for households, together with the degree of instability at the current job

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