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|Titolo:||Policy uncertainty and household savings|
|Data di pubblicazione:||2012|
|Autori interni:||GIAVAZZI, FRANCESCO|
|Autori:||F. Giavazzi; M. McMahon|
|Rivista:||THE REVIEW OF ECONOMICS AND STATISTICS|
|Abstract:||This paper uses German micro data and a quasi-natural experiment to provide new evidence on the empirical importance of precautionary savings. Our quasi-natural experi- ment draws on a sharp increase in uncertainty (as reported in a survey of German citizens) observed in the run-up to the 1998 general election. Our estimates are obtained from a di¤- in-di¤ estimator and thus overcome the identi cation problem that often a¤ects measures of precautionary savings. We nd that household saving increases signi cantly following the increase in uncertainty about the future path of income, suggesting a signi cant pre- cautionary savings motive. We also analyze householdsresponse in terms of labor market choices: we nd evidence of a labor supply response by workers who can use the margin o¤ered by part-time employment. While independent of the reasons why uncertainty in- creased in the run-up to the election, our results are suggestive of the economic e¤ects of "wars of attrition", i.e. situations in which reforms are delayed because political parties are unable to agree on how the burden of a reform should be shared between various groups in society. Delays in adopting a reform, or the possibilty that a reform, after it has been adopted by one government might be revoked by another, raise uncertainty and induce households to save more: consumption may fall and the economy might slow down for no other reason than political uncertainty|
|Appare nelle tipologie:||01 - Articolo su rivista Scientifica|
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