Series: Working Papers. 1214.
Author: Jose Maria Casado.
Full document
Abstract
This paper measures how households smooth changes in consumption when incomes are shifted by permanent or transitory shocks at country and regional level. I compute insurance capacity using the Spanish Continuous Family Expenditure Survey skipping the imputation methods used by the previous literature to mitigate the significant lack of income and consumption panel data information. I find some partial insurance for permanent shocks and a downward bias when imputed data are used. There is significant sensitivity for the youngest and primary educated cohorts that becomes more relevant in some regions. I obtain that durable purchases are a source of insurance with respect to transitory shocks and the effect of family income transfers is almost negligible.