Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects

Christopher Carroll, Jiri Slacalek and Martin Sommer

Economics Working Paper Archive from The Johns Hopkins University,Department of Economics

Abstract: 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.

Date: 2012-09
New Economics Papers: this item is included in nep-dge and nep-mac
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Related works:
Working Paper: Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects (2019)
Software Item: LaTeX source for the paper and programs for A Tractable Model of Buffer Stock Saving (2012)
Working Paper: Dissecting saving dynamics: measuring wealth, precautionary and credit effects (2012)
Working Paper: Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects (2012)
Working Paper: Dissecting saving dynamics: Measuring wealth, precautionary, and credit effects (2012)
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