The behaviour of the permanent and transitory economic shocks for different levels of households' welfare is studied using both consumption and income measures. After testing for heteroskedasticity of the economic shocks, we use local polynomial regression models to estimate the variance of the shocks conditional on welfare level. Italian data covering the period 1980-2004 show evidence of heteroskedasticity of both the transitory and the permanent economic shocks, with the poor experiencing higher variances. The permanent shocks seem to have a more uniform effect at all welfare levels.
Authors
Nicoletta Rosati
Working Paper details
- DOI
- 10.1920/wp.cem.2006.2206
- Publisher
- IFS
Suggested citation
Rosati, N. (2006). A nonparametric analysis of welfare and the economic shocks. London: IFS. Available at: https://ifs.org.uk/publications/nonparametric-analysis-welfare-and-economic-shocks (accessed: 1 July 2024).
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