We show that recent methodological advances in econometric theory raise questions about the results obtained by Lane and Milesi-Ferretti (LMF) in relation to the determinants of international investment patterns (International Investment Patterns, The Review of Economics and Statistics 2008; 90(3):...

On BHPS data we measure various indices of social capital at the individual and household level, and use them as explanatory variables in standard consumption insurance tests. We find that two out of three aspects of social capital positively impact on consumption smoothing, by reducing the...

Using cross-sectional data from the Bank of Italy's Survey on Household Income and Wealth, we make an attempt to assess the relevance of entrepreneurial risk, i.e., idiosyncratic risk borne by firm owners while running their operations. Our new testing procedure will show that progressively more...

Households save income for various reasons, including the need to plan for the future, the intention to leave a bequest, and the desire to guard against unforeseen expenditures and income fluctuations. Although it is widely believed that prudent individuals engage in precautionary saving, the...

The main research question of this paper is whether or not the risk of family disruption has an impact on the consumption/saving decisions of households. Although little empirical work exists in this area, often presenting indirect evidence, the theory is divided over the effect of family risk...

In this note the decision problem of a strategic firm in a general equilibrium setting is analyzed. It is shown that a problem of unanimity arises when such a firm has many shareholders, and that a well known criterion used in the case of market incompleteness can be quite interestingly...

Existing studies of risk pooling among groups of countries are predicated upon the highly restrictive assumption that all countries have symmetric responses to aggregate shocks. We show that the conventional risk sharing test fails to isolate idiosyncratic fluctuations within countries and...

By means of panel and time series regression analyses, and by resorting to a variance decomposition due to Asdrubali et al. (1996) we show that income flows to and from abroad did not play, in general, a large risk sharing role for a pool of EU countries over the horizon 1976-2007. This is...

The aim of this note is to suggest that prudence, i.e. convexity of marginal utility, can only explain a small share of precautionary savings, which we may define as savings generated by variance in income. Therefore, if we are willing to admit that precautionary savings constitute a sizable...