Policy Uncertainty and Household Savings

By Francesco Giavazzi, Michael McMahon. Review of Economics and Statistics, 2012

136 citations recorded by the source corpus.

Abstract Using German microdata and a quasi-natural experiment, we provide evidence on how households respond to an increase in uncertainty. We find that household saving increases significantly following the increase in political uncertainty observed in the run-up to the 1998 German general election. We also find evidence of a labor supply response by workers who can use the margin offered by part-time employment. Our results are suggestive of the economic effects of “wars of attrition”: when political disagreement leads to delays in adopting a reform or the possibility that earlier reforms may be revoked, the increased uncertainty could slow the economy.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/fc1e3371cc560e09c64274de7ffe475dc31d77c7

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. A. Mody
2. Ender Demir

In Economics and Econometrics

1. Ender Demir
2. Giray Gozgor
3. F. Ohnsorge
4. A. Mody
5. D. Sandri
6. Hiro Ito
7. Ahmet Sensoy
8. Saibal Ghosh

Citations in the corpus

• The Effects of Economic Policy Uncertainty on Outbound Travel Expenditures (2018, background): “Previous findings imply that the EPU can affect consumer spending behavior (Baker et al., 2016; Dragouni et al., 2016; Giavazzi & McMahon, 2012).”
• Precautionary Savings in the Great Recession (2012, background): “The importance of precautionary saving has been documented at the individual and household levels both with reduced form and structural approaches (Carroll and Samwick (1997), Engen and Gruber (2001), Gourinchas and Parker (2002), Cagetti (2003), Giavazzi and McMahon (2012)).”