Dissecting saving dynamics: measuring wealth, precautionary, and credit effects
We argue that the U.S. personal saving rate’s long stability (1960s–1980s), subsequent steady decline (1980s–2007), and recent substantial rise (2008–2011) can be interpreted using a parsimonious ‘buffer stock’ model of 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 determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the long-term saving decline, while fluctuations in wealth and uncertainty capture the bulk of the business-cycle variation.
| Author: | Christopher D. Carroll, Jiri Slacalek, Martin Sommer |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-272536 |
| Series (Serial Number) | CFS working paper series (2012, 10) |
| Publisher: | CFS |
| Place of publication: | Frankfurt, Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of first Publication: | 2012 |
| Publishing Institution: | Univ.-Bibliothek Frankfurt am Main |
| Tag: | Consumption; Credit; Saving; Uncertainty; Wealth |
| Institutes: | Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 330 Wirtschaft |
| JEL-Classification: | E21 Consumption; Saving; Wealth |
| E32 Business Fluctuations; Cycles | |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Veröffentlichungsvertrag für Publikationen ohne Print on Demand |
