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On private consumption and uncertainty. Empirical evidence from Spanish regional data

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  • Núñez Carrasco , J. Aníbal

    (Universidad de Málaga)

Abstract

This paper investigates the effect of uncertainty on household decisions regarding consumption. Based on Spanish regional data and taking as a theoretical reference precautionary saving models, we investigate whether macroeconomic uncertainty significantly affects household consumption. To analyze the potential association between these two factors, we used the predicted conditional volatility based on ARMA-GARCH models estimated on regional data. The results show that this measure of uncertainty has a significant effect on household consumption, especially when uncertainty is measured using an ADL model of past uncertainty. As an additional step, we attempt to identify regional patterns to account for the results.

Suggested Citation

  • Núñez Carrasco , J. Aníbal, 2013. "On private consumption and uncertainty. Empirical evidence from Spanish regional data," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 25, pages 111-131.
    • Handle: RePEc:ris:invreg:0201
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    More about this item

    Keywords

    precautionary saving; uncertainty; Spanish regions;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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