Precautionary Savings Under Liquidity Constraints: Evidence From Italy

Date Added: Dec 2009
Format: PDF

In this paper, the author empirically investigates precautionary savings under liquidity constraints in Italy using household panel data. Following Jappelli and Pistaferri (2000) the author analyzes a 3- year (1989-1993) rotating panel of the Bank of Italy Survey of Household Income and Wealth (SHIW). The author exploits a unique indicator of subjective variance of income growth, which allows measuring the strength of the precautionary motive for saving, and a variety of survey-based indicators of liquidity constraints.