Download or read book The Empirical Importance of Precautionary Saving written by Pierre-Olivier Gourinchas and published by . This book was released on 2001 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: One of the basic motives for saving is the accumulation of wealth to insure future welfare. Both introspection and extant research on consumption insurance find that people face substantial risks that they do not fairly pool. In theory, the consumption and wealth accumulation of price-taking households in an economy with incomplete markets differs substantially from the behavior of these same households in the equivalent economy with complete-markets. The question we address in this article is whether we find this difference to be large in practice. What is the empirical importance of precautionary saving? We provide a simple decomposition that characterizes the importance of precautionary saving in the U.S. economy. We use this decomposition as an organizing framework to present four main findings: (a) the concavity of the consumption policy rule, (b) the importance of precautionary saving for life-cycle saving and wealth accumulation, (c) the contribution of changes in risk to fluctuations in aggregate consumption and (d) the significant impact of incomplete markets on aggregate fluctuations in calibrated general equilibrium models. We conclude with directions for future research.
Download or read book Precautionary Saving and Aggregate Demand written by Edouard Challe 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 The Volatility Trap written by Reda Cherif and published by International Monetary Fund. This book was released on 2012-05-01 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store-or-sow" model of growth. High volatility of permanent shocks results in high precautionary saving in the safe asset and low investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical evidence shows a nonlinear relationship between investment and saving and that investment is a hump-shaped function of the volatility of permanent shocks, as predicted by the model.
Download or read book An Inquiry Into the Empirical Importance of Precautionary Saving Motives in the Accumulation of Household and Aggregate Wealth written by Bradley K. Wilson and published by . This book was released on 1998 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Earnings Uncertainty Precautionary Savings and Aggregate Wealth Accumulation written by Ricardo J. Caballero and published by . This book was released on 1990 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Precautionary Savings and the Importance of Business Owners written by Erik Hurst and published by . This book was released on 2005 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we show the pivotal role business owners play in estimating the importance of the precautionary saving motive. Since business owners hold larger amounts of wealth than other households for non-precautionary reasons and also face highly volatile income, they induce a correlation between wealth and income risk regardless of whether or not a precautionary saving motive exists. Using data from the Panel Study of Income Dynamics in the 1980s and the 1990s, we show that among both business owners and non-business owners, the size of precautionary savings with respect to labor income risk is modest and accounts for less than ten percent of total household wealth. However, pooling together the two groups leads to an artificially high estimate of the importance of precautionary savings. New data from the Survey of Consumer Finances further confirms that precautionary savings account for less than ten percent of total wealth for both business owners and non-business owners. Thus, while a precautionary saving motive exists and affects all households, it does not give rise to high amounts of wealth in the economy, particularly among those households who face the most volatile stream of income.
Download or read book On Aggregate Precautionary Saving written by Mark Huggett and published by . This book was released on 1998 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Aggregate Precautionary Savings Motives written by Pierre Mabille and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Precautionary Savings Illiquid Asssets and the Aggregate Consequences of Shocks to Household Income Risk written by and published by . This book was released on 2015 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Precautionary Motives Versus Waiting Options written by Makoto Saito and published by . This book was released on 2003 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Precautionary Savings Illiquid Assets and the Aggregate Consequences of Shocks to Household Income Risk written by Christian Bayer and published by . This book was released on 2015 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Households face large income uncertainty that varies substantially over the business cycle. We examine the macroeconomic consequences of these variations in a model with incomplete markets, liquid and illiquid assets, and a nominal rigidity. Heightened uncertainty depresses aggregate demand as households respond by hoarding liquid "paper" assets for precautionary motives, thereby reducing both illiquid physical investment and consumption demand. This translates into output losses, which a central bank can prevent by providing liquidity. We show that the welfare consequences of uncertainty shocks crucially depend on a household's asset position. Households with little human capital but high illiquid wealth lose the most from an uncertainty shock and gain the most from stabilization policy.
Download or read book Precautionary Saving and Unemployment Insurance written by Kelvin Robert Utendorf and published by . This book was released on 1993 with total page 386 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Dissecting Saving Dynamics written by Mr.Christopher Carroll and published by International Monetary Fund. This book was released on 2012-09-01 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We argue that the U.S. personal saving rate’s long stability (from the 1960s through the early 1980s), subsequent steady decline (1980s - 2007), and recent substantial increase (2008 - 2011) can all be interpreted using a parsimonious ‘buffer stock’ model of optimal consumption in the presence of labor income uncertainty and credit constraints. Saving in the model is affected by the gap between ‘target’ and actual wealth, with the target wealth determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the saving rate’s long-term decline, while fluctuations in net wealth and uncertainty capture the bulk of the business-cycle variation.
Download or read book Precautionary Saving and the Marginal Propensity to Consume written by Miles S. Kimball and published by . This book was released on 1990 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Health Expenditures and Precautionary Savings written by Laurence J. Kotlikoff and published by . This book was released on 1986 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: The precautionary motive for saving is an important issue that is receiving increasing attention. Part of the motivation for this interest stems from the post war coincidence of two trends, one a decline in the U.S. rate of saving and the other an increase in insurance of various types, including unemployment insurance, annuity insurance, disability insurance, and health insurance. This paper examines precautionary saving for uncertain health care payments using a simple two period and illustrates this model's theoretical insights through simulations of a 55 period life cycle model. While derived from a highly stylized model, the simulations give the impression that precautionary saving for uncertain health expenditures could explain a large amount of aggregate savings. Adding uncertain health expenditures to the model's economy raises long run savings by almost one third, assuming individuals self insure. Arrangements for insuring uncertain health expenditures also have potentially quite sizable effects on savings. Introducing actuarially fair insurance to the economy with uncertain health expenditures reduces the steady state level of wealth of that economy by 12 percent. Switching from the fair insurance arrangement to a Medicaid-type program with an asset test further reduces steady state wealth by 75 percent.
Download or read book The Rise in Corporate Saving and Cash Holding in Advanced Economies Aggregate and Firm Level Trends written by Mai Chi Dao and published by International Monetary Fund. This book was released on 2018-12-07 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using cross-country national accounts and firm-level data, we document a broad-based trend in rising gross saving and net lending of non-financial corporates across major industrialized countries over the last two decades, though most pronounced in countries with persistent current account surpluses. We find that this trend holds consistently across major industries, and is concentrated among large firms, driven by rising profitability, lower financing costs, and reduced tax rates. At the same time, higher gross corporate saving have not supported a commensurate increase in fixed capital investment, but instead led to a build-up of liquid financial assets (cash). The determinants of corporate cash holding and saving are also broad-based across countries, with the growth in assets of large firms, R&D intensity, and lower effective tax rates accounting for most of the increase over the last 15 years.
Download or read book The importance of precautionary motives in explaining individual and aggregate saving written by R. Glenn Hubbard and published by . This book was released on 1993 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt:
