Precautionary Saving and Precautionary Wealth
نویسندگان
چکیده
This is an entry for The New Palgrave Dictionary of Economics, 2nd Ed.
منابع مشابه
Precautionary Saving Over the Lifecycle
This paper studies the quantitative importance of precautionary wealth accumulation relative to life—cycle saving for retirement. Section 1 examines panel data on earnings from the PSID. Using a bivariate normal model of random effects, we find that second— period—of—life earnings are strongly positively correlated with initial earnings but have a higher variance. Section 2 studies the conseque...
متن کاملPrecautionary saving and partially observed income $
I propose an intertemporal precautionary saving model in which the agent’s labor income is subject to (possibly correlated) shocks with different degrees of persistence and volatility. However, he only observes his total income, not individual components. I show that partial observability of individual components of income gives rise to additional precautionary saving due to estimation risk, th...
متن کاملPrecautionary Saving and Consumption Smoothing Across Time and Possibilities.
This paper examines how aversion to risk and aversion to intertemporal substitution determine the strength of the precautionary saving motive in a two-period model with Selden/Kreps-Porteus preferences. For small risks, we derive a measure of the strength of the precautionary saving motive which generalizes the concept of "prudence" introduced by Kimball (1990b). For large risks, we show that d...
متن کاملThe Empirical Importance of Precautionary Saving
One of the basic motives for saving is the accumulation of wealth to ensure 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 pricetaking households in an economy with incomplete markets differs substantially from the behavior of these same ho...
متن کاملPrecautionary Saving and Consumption Smoothing
This paper examines how aversion to risk and aversion to intertemporal substitution determine the strength of the precautionary saving motive in a two-period model with Selden/Kreps-Porteus preferences. For small risks, we derive a measure of the strength of the precautionary saving motive which generalizes the concept of “prudence” introduced by Kimball [12]. For large risks, we show that decr...
متن کامل