Giavazzi, Francesco and McMahon, Michael F. (2012) Policy uncertainty and household savings. Review of Economics and Statistics, Volume 94 (Number 2). pp. 517-531. doi:10.1162/REST_a_00158 ISSN 0034-6535.

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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.

Item Type:	Journal Article
Subjects:	H Social Sciences > HG Finance
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Finance, Personal, Uncertainty, Germany -- Politics and government -- 1990-
Journal or Publication Title:	Review of Economics and Statistics
Publisher:	MIT Press
ISSN:	0034-6535
Official Date:	May 2012
Dates:	Date Event May 2012 Published
Volume:	Volume 94
Number:	Number 2
Page Range:	pp. 517-531
DOI:	10.1162/REST_a_00158
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
Date of first compliant deposit:	19 December 2015
Date of first compliant Open Access:	19 December 2015
Funder:	Bank of England

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