Arbeitspapier
Household savings decision and income uncertainty
This paper empirically investigates the effects of changes in the interest rate as well as transitory income uncertainty on households' consumption-savings decision. Applying a structural demand model to German survey data, we estimate the uncompensated interest rate elasticity for savings, in line with the literature, to around zero. Accordingly, any policy-induced variation of net returns to savings is expected to have no significant effects on the level of savings. Moreover, we find significant effects of precautionary savings on the consumption-savings decision. As a result of a doubling of transitory income uncertainty, an average household increases savings by 4:4%. These effects vary by household composition and social status.
- Language
-
Englisch
- Bibliographic citation
-
Series: DIW Discussion Papers ; No. 1046
- Classification
-
Wirtschaft
Consumer Economics: Empirical Analysis
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Macroeconomics: Consumption; Saving; Wealth
- Subject
-
Consumption-savings decision
interest rate elasticity of savings
income uncertainty
Sparen
Zeitpräferenz
Einkommen
Risiko
Zins
Elastizität
Schätzung
Deutschland
- Event
-
Geistige Schöpfung
- (who)
-
Beznoska, Martin
Ochmann, Richard
- Event
-
Veröffentlichung
- (who)
-
Deutsches Institut für Wirtschaftsforschung (DIW)
- (where)
-
Berlin
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Beznoska, Martin
- Ochmann, Richard
- Deutsches Institut für Wirtschaftsforschung (DIW)
Time of origin
- 2010
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