Saving on a Rainy Day, Borrowing for a Rainy Day
نویسندگان
چکیده
The aim of this paper is to understand what a recession means for individual consumers, and to model in a life-cycle framework how individuals respond to recessions. Our focus is on the sharp increase in savings rates that have been observed in the current and recent recessions. We show empirically that these saving spikes were short-lived and common to all working age groups. We then study life-cycle models in which recessions involve one or more of: (i) an aggregate permanent negative shock to individual income; (ii) an increase in the variance of idiosyncratic permanent shocks; (iii) a tightening of credit constraints; (iv) asset market crashes. In simulations and in the data we aggregate explicitly from individual behavior. We model credit tightening as a constraint on new borrowing. We show that the rise in the aggregate savings ratio is driven by increases in uncertainty, rather than tighening of credit; temporary shocks to the supply of credit generate increases in saving only among younger agents. We are grateful to Olympia Bover, Chris Carroll, Cristina deNardi and various conference and seminar participants for comments, and to Cormac ODea for help with the data. Low gratefully acknowledges funding from the ESRC as a Research Fellow, grant number RES-063-27-0211. This research was also co-funded by the ESRC-funded Centre for Microeconomic Analysis of Public Policy (CPP, reference RES-544-28-5001). All errors are our own.
منابع مشابه
Zoning and analysis of pervasive rainfall in rainy areas of Iran In the statistical period of 30 years (1987-1987)
Precipitation is a phenomenon resulting from complex atmospheric interactions and among climatic events, due to its vital role, it has special importance. The importance of precipitation durability, especially in arid and semi-arid regions, which includes most of Iran, is greater than its volume. The purpose of this study is to identify Iran's precipitation areas in terms of precipitation durab...
متن کاملAnalysis of the Spell of Rainy Days in Lake Urmia Basin using Markov Chain Model
In this study, the Frequency and the spell of rainy days was analyzed in Lake Uremia Basin using Markov chain model. For this purpose, the daily precipitation data of 7 synoptic stations in Lake Uremia basin were used for the period 1995- 2014. The daily precipitation data at each station were classified into the wet and dry state and the fitness of first order Markov chain on data series was e...
متن کاملProbabilistic model predicts dynamics of vegetation biomass in a desert ecosystem in NW China.
The temporal dynamics of vegetation biomass are of key importance for evaluating the sustainability of arid and semiarid ecosystems. In these ecosystems, biomass and soil moisture are coupled stochastic variables externally driven, mainly, by the rainfall dynamics. Based on long-term field observations in northwestern (NW) China, we test a recently developed analytical scheme for the descriptio...
متن کاملPrecipitation climatology over Mediterranean Basin from ten years of TRMM measurements
Climatological features of mesoscale rain activities over the Mediterranean region between 5 W–40 E and 28 N–48 N are examined using the Tropical Rainfall Measuring Mission (TRMM) 3B42 and 2A25 rain products. The 3B42 rainrates at 3-hourly, 0.25×0.25 spatial resolution for the last 10 years (January 1998 to July 2007) are used to form and analyze the 5-day mean and monthly mean climatology of r...
متن کامل