TY  - UNPD
A1  - Carroll, Christopher D.
T1  - Precautionary saving and the marginal propensity to consume out of permanent income
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2009,16
N2  - The budget constraint requires that, eventually, consumption must adjust fully to any permanent shock to income. Intuition suggests that, knowing this, optimizing agents will fully adjust their spending immediately upon experiencing a permanent shock. However, this paper shows that if consumers are impatient and are subject to transitory as well as permanent shocks, the optimal marginal propensity to consume out of permanent shocks (the MPCP) is strictly less than 1, because buffer stock savers have a target wealth-to-permanent-income ratio; a positive shock to permanent income moves the ratio below its target, temporarily boosting saving. Keywords: Risk, Uncertainty, Consumption, Precautionary Saving, Buffer Stock Saving, Permanent Income Hypothesis.
T3  - CFS working paper series - 2009, 16 
KW  - Risk
KW  - Uncertainty
KW  - Consumption
KW  - Precautionary Saving
KW  - Buffer Stock Saving
KW  - Permanent Income Hypothesis
KW  - Sparen
Y1  - 2009
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/6734
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-68357
ER  -