We study the effect of income uncertainty on consumption in a model that includes precautionary saving. In contrast to previous studies, we focus on time-series variation in income uncertainty. Our time-series measure of income uncertainty is constructed from a panel of forecasts. We find...

We study the role of income uncertainty in an intertemporal optimization model of consumption that includes precautionary saving. In contrast tp previous studies, we focus on time-series variation in income uncertainty. Our time-series measure of income uncertainty is constructed from a panel...