Precautionary savings and expectations of Italian households during the crisis: an agent-based model

Abstract

This thesis studies the behavior of Italian households towards saving during the recent crisis. Starting from the analysis of microdata (“Indagine sui bilanci delle famiglie Italiane”, a survey of Banca d'Italia) and households confidence indexes elaborated by ISTAT, exploiting the literature on precautionary savings and relevant models, this thesis tries to interpret households behaviour.

Following an "epidemiological" model developed by Carroll, expectations are assumed to spread out like a virus, with each individual having a given probability of being "infected" by the last professional forecast of a given macroeconomic indicator (e.g. inflation or unemployment rate) or maintaining his own expectation. We develop a similar agent-based model and show that heterogeneity in educational level, which is related to an heterogeneity in the "infection probaibility", could help to explain, without renouncing to the assumption of rationality, why different class of households behaved differently at the very beginning of the crisis, with the better educated and the richer appearing to be "more rational" than the less educated or the poorer.