Precautionary Saving and the Marginal Propensity to Consume Out of Permanent Income PDF Download
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Author: Chris Carroll
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 17
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Book Description
Because the budget constraint implies that consumption must eventually fully adjust to permanent shocks, intuition suggests that consumption-smoothers will have an immediate marginal propensity to consume of one out of permanent shocks. However, this paper shows that if consumers are impatient and experience both transitory and permanent income shocks, the immediate marginal propensity to consume out of permanent shocks is strictly less than one, because buffer-stock savers have a target wealth-to-permanent-income ratio; for a consumer starting at the target ratio, a positive shock to permanent income moves their actual wealth- to-permanent-income ratio below the target, temporarily boosting the saving rate
Author: Chris Carroll
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 17
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Book Description
Because the budget constraint implies that consumption must eventually fully adjust to permanent shocks, intuition suggests that consumption-smoothers will have an immediate marginal propensity to consume of one out of permanent shocks. However, this paper shows that if consumers are impatient and experience both transitory and permanent income shocks, the immediate marginal propensity to consume out of permanent shocks is strictly less than one, because buffer-stock savers have a target wealth-to-permanent-income ratio; for a consumer starting at the target ratio, a positive shock to permanent income moves their actual wealth- to-permanent-income ratio below the target, temporarily boosting the saving rate
Author: Christopher D. Carroll
Publisher:
ISBN:
Category :
Languages : es
Pages : 17
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Book Description
Author: Miles S. Kimball
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 42
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Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The National Bureau of Economic Research, Inc. presents an abstract for the paper entitled "Precautionary Saving and the Marginal Propensity to Consume Out of Permanent Income," by Christopher D. Carroll and published April 2001. The paper discusses consumer behavior and saving and the propensity to consume from permanent income. Users may purchase the full text of the paper online.
Author: Miles Kimball
Publisher:
ISBN:
Category :
Languages : es
Pages : 42
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Author: Annamaria Lusardi
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 302
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Book Description
Author: Richard H. Adams
Publisher: World Bank Publications
ISBN:
Category : Ahorro - Pakistan
Languages : en
Pages : 34
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Book Description
Much of past literature has assumed that households in developing countries save at the same marginal rate from all sources of income. But in rural Pakistan households save at very different marginal rates from different sources of income. The marginal propensity to save from those sources of income that are more variable and uncertain --- like external remittances --- is much higher than from those sources of income that are more predictable --- like rental income.
Author: Pierre-Olivier Gourinchas
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 32
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Book Description
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.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Author:
Publisher:
ISBN:
Category : Crops and climate
Languages : en
Pages : 32
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