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dc.contributor.authorAaberge, Rolf
dc.contributor.authorLiu, Kai
dc.contributor.authorZhu, Yu
dc.date.accessioned2014-12-12T08:16:15Z
dc.date.available2014-12-12T08:16:15Z
dc.date.issued2014-12
dc.identifier.issn0804-6824
dc.identifier.urihttp://hdl.handle.net/11250/227064
dc.description.abstractDespite macroeconomic evidence pointing to a negative aggregate consumption response due to political uncertainty, few papers have used microeconomic panel data to analyze how households adjust their consumption after an uncertainty shock. We study household savings and expenditure adjustment from an unexpected, large-scale and rapidly evolving political shock that occurred largely in May 1989 in Beijing, China. Using monthly micro panel data, we present evidence that a surge in political uncertainty resulted in significant temporary increases in savings among urban households in China. Households responded mainly by reducing semi-durable expenditure and frequency of major durable adjustment. The uncertainty effect is more pronounced among older, wealthier, and more socially advantaged households. We interpret our findings using existing models of precautionary behavior. By focusing on time variation in uncertainty, our identification strategy avoids many of the potential problems in empirical studies of precautionary savings such as self-selection and life-cycle effects.nb_NO
dc.language.isoengnb_NO
dc.publisherSAMnb_NO
dc.relation.ispartofseriesDiscussion paper;34/14
dc.subjectChinanb_NO
dc.subjecthousehold savingsnb_NO
dc.subjectpolitical uncertaintynb_NO
dc.titlePolitical Uncertainty and Household Savingsnb_NO
dc.typeWorking papernb_NO


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