Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand.

Abstract

This paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income. Time-series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks. The relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income. Copyright 1992 by American Economic Association.