Download or read book Essays on Household Saving Rates written by Yi Chen and published by . This book was released on 2015 with total page 177 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is devoted to understanding household saving rates of the two largest countries in the world - China and the United States. The first two chapters explain why the Chinese elderly save at extraordinarily high rates and the third chapter explains why the U.S. personal saving rate has been falling since 1980's. Chapter 1 explores the potential explanation of the high saving rates of the Chinese elderly. The high saving rate of China has attracted global attention. Furthermore, the saving rates of the Chinese elderly are especially high. Understanding why the elderly in China save at high rates is important for two reasons: (1) it partially explains the high aggregate saving rate in China, and (2) the fact that the elderly save more than the middle-aged contradicts the predictions of the life-cycle model. In this chapter, I present evidence that pension income is the primary explanation for the high saving rates of elderly Chinese households. I provide this evidence in two steps. First, I document three stylized facts that are consistent with this hypothesis: (1) saving rates are higher in years with higher pensions, (2) saving rates are higher for those with more generous pension plans, and (3) policy reforms that exogenously increase pensions also increase saving rates. However, a higher pension income on its own cannot explain the entire pattern because a household can simultaneously adjust its consumption. Therefore, in the second step, I demonstrate that concerns regarding future medical expenditures and bequest motives can explain why households do not increase their consumption commensurate with increases in pension income. In Chapter 2, I build and estimate a dynamic life cycle model for two purposes. The first is to quantify the effect of pension income. The second purpose is to carry out counterfactual policy simulations. The model is a standard life-cycle model with three main components. First, pension income is properly modeled to capture the increase observed in the data. The second part of the model is about uncertainty. In the model, I cover income uncertainty, health status and medical expenditures as the main source of uncertainty for the elderly. Finally, individuals have bequest motives. I estimate the model using the method of simulated moments. The estimation results show that it is possible to match the data with reasonable parameters. It is noteworthy that the estimated degree of relative risk aversion for the Chinese elderly is similar to that of U.S. population in other studies. This implies when factors including pension income, medical expenditures and bequest motives are properly taken into account, it is not necessary to assume Chinese elderly to be highly risk averse to explain their high saving rates. With the model, I am able to carry out various policy simulations. The most interesting simulation is if the Chinese pension and economy growth rate becomes similar to those in the United States, the saving rates of the Chinese elderly will fall to the level of the U.S. Chapter 3 is a joint work with Maurizio Mazzocco and Bela Szemely. In this chapter we provide evidence that most of the decline in the U.S. personal saving rate from 9 percent in the early eighties to 2 percent in 2007 can be explained by the steep increase in health expenditure experienced by the U.S. economy during the same period. The most convincing evidence is provided using the FDA approval of new drugs as a source of exogenous variation in medical expenses. Employing this source of variation, we find that a $1$ percentage point increase in health expenditure generates a decline in the U.S. saving rate that is between $0.58$ and $0.67$ percentage points. Using this result, we calculate that the rise in health expenditure explains about 83 percent of the drop in the U.S. saving rate. To evaluate whether households changed their consumption decisions to mitigate the effect of higher medical expenses, we develop a stylized model of household's and government's decisions. Using the model jointly with our empirical results, we find that the households' response to the rise in health expenses was negligible. This is why the saving rate dropped by a significant amount. Finally, with the objective of better understanding why households did not respond, we provide evidence on how the increase in medical expenditure was funded. We find that it was paid almost exclusively by an increase in government debt, a reduction in other government expenses, and an increase in employer contributions to health funds. The main implication of these findings is that the households were barely affected by the rise in health expenditure. The households' negligible response was, therefore, rational.
Download or read book Essays on the Determinants of Vietnamese Household Saving Rates written by Xuan Hua Thanh and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Saving and the Accumulation of Wealth written by Albert Ando and published by Cambridge University Press. This book was released on 1994-03-25 with total page 419 pages. Available in PDF, EPUB and Kindle. Book excerpt: Taking Italy as their field of research, the contributors conduct a coherent analysis of households' saving behaviour.
Download or read book Three Essays on Household Saving and Wealth written by Kyeongwon Yoo and published by . This book was released on 2003 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on Money and Saving written by Hiroshi Shibuya and published by . This book was released on 1988 with total page 206 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on Household Saving Behavior and Fiscal Policy written by Stephen Ira Miran and published by . This book was released on 2010 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on Household Finance written by Bruno Ferman and published by . This book was released on 2012 with total page 126 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays. The first chapter studies whether credit demand is sensitive to interest rates, to the prominence of interest rate disclosure, and to nudges. Consumer credit regulations usually require that lenders disclose interest rates. However, lenders can evade the spirit of these regulations by concealing rates in the fine print and highlighting low monthly payments. I explore the importance of such evasion in Brazil, where consumer credit for lower and middle income borrowers is expanding rapidly, despite particularly high interest rates. By randomizing contract interest rates and the degree of interest rate disclosure, I show that most borrowers are highly rate-sensitive, whether or not interest rates are prominently disclosed in marketing materials. An exception is high-risk borrowers, for whom rate disclosure matters. These clients are rate-sensitive only when disclosure is prominent. I also show that borrowers who choose this type of financing are responsive to nudges that favor longer-term plans. Despite this evidence, the financial consequences of information disclosure, even for high-risk borrowers, are relatively modest, and clients are less susceptible to nudges when the stakes are higher. Together, these results suggest that consumers in Brazil are surprisingly adept at decoding information even when lenders try to obfuscate the interest rate information, suggesting a fair amount of sophistication in this population. The second chapter (co-authored with Leonardo Bursztyn, Florian Ederer, and Noam Yuchtman) studies the importance of peer effects in financial decisions. Using a field experiment conducted with a financial brokerage, we attempt to disentangle channels through which a person's financial decisions affect his peers'. When someone purchases an asset, his peers may also want to purchase it because they learn from his choice ("social learning") and because his possession of the asset directly affects others' utility of owning the same asset ("social utility"). We randomize whether one member of a peer pair who chose to purchase an asset has that choice implemented, thus randomizing possession of the asset. Then, we randomize whether the second member of the pair: 1) receives no information about his peer, or 2) is informed of his peer's desire to purchase the asset and the result of the randomization determining possession. We thus estimate the effects of: (a) learning plus possession, and (b) learning alone, relative to a control group. In the control group, 42% of individuals purchased the asset, increasing to 71% in the "social learning only" group, and to 93% in the "social learning and social utility" group. These results suggest that herding behavior in financial markets may result from social learning, and also from a desire to own the same assets as one's peers. The third chapter (co-authored with Pedro Daniel Tavares) uses data on checking and savings accounts for a sample of clients from a large bank in Brazil to calculate the prevalence and cost of "borrowing high and lending low" behavior in a setting where the spread between the borrowing and saving rates is on the order of 150% per year. We find that most clients maintain an overdrawn account at least one day a year while having liquid assets. However, the yearly amount of avoidable financial charges would only correspond, on average, to less than 0.5% of clients' yearly earnings. We also show that consumers are less likely to engage in such behavior when the costs of doing so are higher. These results suggest that the spread between the borrowing and saving rates is a key determinant of this behavior.
Download or read book Essays on Household Saving Religion and Pay Frequency written by and published by . This book was released on 2013 with total page 171 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on Household Consumption written by Matias Felix Barenstein and published by . This book was released on 2004 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays on the Effect of Household Debt and Housing Wealth on the U S Economy written by Kyoungsoo Yoon and published by . This book was released on 2011 with total page 91 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: The two essays in my dissertation clarify the role of household debt and housing wealth in the U.S. economy because the effect of household debt and house prices on economic activity is conflicting based on existing empirical literature. In my first essay, Three Competing Effects of Expansion in Housing Finance on Consumption, I explicitly consider both debt service burden and wealth risk by adjusting income data with debt service and wealth data with its risk. Based on split-sample estimates of various consumption functions with different time horizons together with the data adjustment, I find that expansion in housing finance since the mid 1980s has three competing effects on consumption. First, housing finance expansion decreases the sensitivity of a household's consumption response to short-run and medium-run movements in income via a relaxed credit constraint. Second, an increase in the liquidity of housing wealth leads to a bigger response of consumption to changes in house prices. However, this increased housing wealth effect can be mitigated or magnified from the last competing effect of increased debt service, depending on the directions of movements in house prices and interest rates. Thus, the net effect of expanded housing finance on consumption depends on the relative magnitudes of the three competing effects in the face of movements in income, house prices, and interest rates. The second essay, The Role of Household Debt and Housing Wealth in the Recent Downturn of the U.S. Economy, uses state-level household debt and housing wealth data built from the Consumer Finance Monthly survey together with measures of economic activity at the state level during the business cycle of 2002-2009 in the U.S. to overcome limitations associated with national-level aggregate data. I find that increased household debt combined with large positive and negative fluctuations in housing wealth led to the recent severe downturn of the U.S. economy. While the increased debt service burden itself negatively affects consumption, households' attitudes toward debt surveyed as debt stress also seem to suppress economic activity such as consumption spending and residential investment.
Download or read book Essays in Household Finance written by Benjamin Guin and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of four independent essays on households' financial decisions. The first three essays examine relationships between households and banks. The first essay examines the determinants and aggregate implications of households' borrowing decisions on the mortgage market (chapter 1). The second essay analyses the determinants of households' access to and usage of bank accounts in transition economies (chapter 2). The third essay examines the behavior of households if banks are in distress with respect to their withdrawal decisions from deposit accounts (chapter 3). The last essay analyses the role of cultural determinants for households' saving decisions (chapter 4).
Download or read book Essays in Household Savings and Portfolio Choice written by Mariela Dal Borgo and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Essays in Household Finance written by Fernando Lopez (Professor of finance) and published by . This book was released on 2014 with total page 121 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays that examine the determinants of individual financial decision making and the welfare implications of those decisions. In the first essay, I consider an important dimension of individual welfare, namely mental health, to study whether the use of different financial services helped to withstand the damage caused by a large earthquake that hit Chile in February 2010. Using a rich nationally representative panel data set and geographic differences in ground shaking caused by the earthquake as an exogenous source of damage, I find that earthquake insurance reduced the incidence of post-traumatic stress disorder (PTSD) by more than 50% among individuals who lived in properties that were damaged by the earthquake. However, I find no significant effects for the amount of savings and bank relationships. Overall, these results suggest that the welfare impact of financial services is driven by the ability to transfer resources across states of the world, but not through time. In the second essay, I study the extent to which low income students in the U.S. understand and take into consideration the financial aspects of their higher education. Using a rich data set from a large U.S. non-profit organization, I find that low income post-secondary students are poorly informed about three main financial aspects of their higher education: expected income, financing costs and opportunity cost of being enrolled. This result holds for students who are academically talented, have been exposed to financial education (including a semester-long personal finance class) and relevant financial experiences. Furthermore, preliminary results of a randomized controlled trial (N=117) suggest that an hour-long financial education workshop on the main financial aspects of college increases students' GPA by 0.2 points (p-value=0.15) and their ability to receive financial aid from the non-profit organization by 11.4 percentage points (p-value=0.25). Overall, these results suggest that (lack of) financial literacy can affect both educational attainment and financial outcomes of low income post-secondary students. In the third essay, I study if civic capital, defined as the set of values and beliefs within a community that promote cooperation for socially valuable purposes (Guiso, Sapienza and Zingales, 2011), affects the use of deposit accounts among Chilean households. Using an institutional setting of limited supply side barriers for access to deposit accounts and a rich household data set, I find that households from areas with higher levels of civic capital, measured as the rate of registration to vote, are more likely to have savings accounts and hold larger amounts in those accounts. This association is stronger for households that are less educated and less intensive users of communication and information devices such as phone, computer and the internet. These results are consistent with the idea that civic capital helps to overcome educational and informational barriers that limit the demand for deposit accounts.
Download or read book Essays on the Consumption Saving and Borrowing Behavior of Poor Households written by James Xavier Sullivan and published by . This book was released on 2002 with total page 267 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Chapter II, I examine whether asset restrictions under welfare programs have affected the vehicle assets of poor households. The analysis considers whether these asset restrictions help explain why the poor have very low saving rates. I find fairly strong evidence that the loosening of asset restrictions in the 1990s did result in greater holdings of vehicle assets for low educated single mothers.
Download or read book Essays in Consumer Debt Personal Saving Rate and Household Insolvency in Canada written by Mohamad Ghaziaskar and published by . This book was released on 2017 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three essays attempting to determine the key determinants of spending-saving behaviour and financial stability of Canadian households from both micro and macro economics. In the first chapter, we try to isolate and evaluate the socio-economic character- istics of households who accumulate debt by spending more than what they earn in a given year. In particular, with a focus on the right tail of spending distribution -households who tend to spend a larger fraction of their income- we use multivariate regression type analysis to isolate socio-economic factors that contribute to debt accumulation and lead to insolvency. We aim to highlight the micro level factors that have contributed to the increase in the proportion of spender households in the population. Specifically, what are the marginal effects of age, income level, education, and family structure on the probability of a given households spends more than its income? Related to this question, we also consider the effect of budget allocation decisions on the probability of spending more than income and accumulating debt. We find that budget share of specific items in household consumption basket, has important information about the spending-saving behaviour of a household. Our analysis provides valuable information about what goods and services are the main outlays of expenditure for households in severe debt. The second chapter is about evaluating the relationship between household's saving rate and its long-run income from a more technical perspective. This chapter is an attempt to address the possible endogeneity issue present in this relationship. In addition to the conventional and widely exercised methodology, three alternative approaches are considered, and in a Monte Carlo experiment, the performance of four approaches is tested in three different environments. Results of our analysis show that the conventional methodology outperforms only when there is a simple linear type of endogeneity in the model. However, when more complicated types of endogeneity are present, it fails to predict saving rate unbiasedly. In the end, using FAMEX and SHS datasets from Canada, we re-evaluate the question with all different methods. Our empirical analysis suggests that more affluent households do save a larger fraction of their income, and the results are consistent across different years not sensitive to different instruments. Finally, the third chapter looks at the household financial stability from a macroeconomic perspective. Using aggregate data, at the provincial level, on households insolvency rate, we try to point out important aggregate key factors in determining financial instability of households. In a series of panel regression analysis, we explore the effect of aggregate variables such as GPD, unemployment rate, housing prices, interest rate, and household debt level, on the insolvency rate of households. Moreover, in a panel vector autoregressive estimation, we attempt to investigate the interactive effects and consequences of insolvency rate and gross domestic product, while controlling for other related aggregate variables. The key finding is that higher levels of household debt are associated with higher insolvency rate, and insolvency rate has a negative impact on GDP.
Download or read book Two Essays on Spatial Skill Sorting and Household Saving Behavior written by Minjuan Sun and published by . This book was released on 2018 with total page 107 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies two wide ranging phenomena and their socio-economic impacts: urban divergence in terms of geographical skill sorting and fast rising housing prices. The first essay explores the empirical pattern as well as the driving forces behind the American cities' diverging path over the past forty years. Compared to the rest of the U.S. cities, the top 20 largest cities have been growing faster in several aspects, such as city-average wage, housing price, and measured innovation intensity (e.g., patents, venture capital). In addition, this geographical divergence has contributed substantially to the rising inequality in America. To explore the causes of this divergence, this paper constructs a spatial sorting model where entrepreneurs with different talents can freely move across cities. The key idea is that cities with advantages in innovation attract more productive entrepreneurs and more workers, thereby driving up wages and housing prices. Two things distinguish my models from others: 1. Large cities are having endogenous innovation advantage in equilibrium; 2. I can freely explore the driving forces behind the divergence, with an emphasis on how technology changes can reinforce the spatial sorting mechanism. Specifically, three types of technological changes have increased the benefits of skill clustering in innovative cities: general productivity increases; improvements in communications technologies; and declines in trade costs.The second essay studies how heterogeneous households respond to the fast rising housing prices through their life-cycle behaviors. Chinese housing market has been undergoing a rapid booming period since 1998, causing the house prices increasing significantly. As a result, households endured severe financial burdens to buy homes at price-to-income ratios of around six. Along with the rising house prices, household savings rate has been increasing consistently since 1998. Can the rising house prices be an important factor to explain the increase in household saving rate? This paper develops a life cycle dynastic model with endogenous choice on housing, coresidence and intergenerational transfer, then quantitatively analyze the effect of housing price on household saving. It shows that housing is an important motive for saving, and it accounts for about 35% of the increase in household savings rate. The housing situation affects households' saving behavior through three channels. First, households are financially constrained due to the down payment requirement and they choose to limit their consumption in order to buy houses. Second, young adults live in their parents' houses for a long time and save more intensively, since they get to pay less for the housing expenses under coresidence. Thirdly, older parents make large sum of intergeneration transfer in aid of the children's housing purchase, indicating the housing affordability issue also has influence on old parents' saving decisions.
Download or read book Essays on Macroeconomics written by Ali Güneş and published by . This book was released on 2013 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This dissertation considers two different issues in macroeconomics. The first chapter reconciles the savings rate profile with the earnings profile by education. The second chapter tries to uncover the health production function. In the first chapter, I reconcile the savings rate profile with the earnings profile by education. The permanent income hypothesis suggests that an individual with a steeper income profile should save a lower fraction of his income. However, life-cycle profiles of the savings rate in U.S. data are at odds with this prediction. College graduates, who on average experience a much steeper income profile than non-college graduates, exhibit a higher savings rate profile. To reconcile this, I incorporate imperfect information about deterministic (ability, skill) and stochastic (shock) components of earnings profiles into a life-cycle model of consumption with heterogeneous agents and incomplete markets. I find that the imperfect information model is able to achieve a higher savings rate profile for college graduates. Higher skill heterogeneity for college graduates, which calls for a precautionary savings motive under imperfect information, accounts for this at the early ages. As labor market outcomes are realized, this uncertainty is gradually resolved. However, agents with low ability, who fail to accumulate assets in the early period, are unable to dissave in the later period. This accounts for the higher savings rate for college graduates at the later ages. I also quantitatively assess an alternative hypothesis, different time preference rates, for the savings rate gap by education. I conclude that accounting for the savings rate profile that we see in the data requires an unrealistically large gap between the time preference rates of the two groups. In the second chapter, I try to uncover the health production function. Just like any production or consumption activity, the production of health involves both time and goods. For example, a typical household in the U.S. spends $3,000 on health each year and 20 minutes per day on exercise activity. However, most existing studies that incorporate health accumulation into life-cycle models focus on the expenditure as the only input for health production. Based on detailed data from the Medical Expenditure Panel Survey (MEPS) and the American Time Use Survey (ATUS), I construct the life-cycle profiles of health status, health expenditure, and time allocated to exercise. I find that there are important and interesting differences in the profile of inputs and output of health: (i) more educated individuals are persistently healthier, (ii) health expenditures across education groups are similar, and (iii) more educated individuals allocate persistently more time to exercise. These profiles imply that the educational gaps in time allocated to exercise might contribute to the educational gaps in health capital. To quantitatively assess this, I compute a life-cycle model with an augmented health production function. I find that the higher relative efficiency of exercise to expenditure for more educated individuals might account for inputs and output of health at the early ages. However, it does not have much effect at the later ages, since the aging effect trivializes the education effect in the health production technology"--Page iv-v.