Policy Uncertainty and Household Savings
Name
Giavazzi-2012-POLICY UNCERTAINTY A.pdf
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309.87 KB
Format
Adobe PDF
Checksum (MD5)
1c519402a50b241570bcf47b6288a8e3
Author(s)
Giavazzi, Francesco
McMahon, Michael
Date Issued
April 2012
Journal
Review of Economics and Statistics
Publisher
MIT Press
Citation
Giavazzi, Francesco, and Michael McMahon. “Policy Uncertainty and Household Savings.” Review of Economics and Statistics 94.2 (2012): 517–531. © 2012 The MIT Press
Version
Final published version
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.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1162/REST_a_00158
