Cyclical precautionary saving and monetary policy

Bianca De Paoli () and Pawel Zabczyk

Research Bulletin, 2012, vol. 16, 7-9

Abstract: Some estimates suggest that precautionary saving may account for more than 40% of all wealth accumulation. The strength of the underlying precautionary motives is arguably closely related to risk aversion and as such is likely to fluctuate over the business cycle. In this article we study the implications of these cyclical swings in risk aversion and precautionary saving for the optimal conduct of monetary policy. JEL Classification: E32, G12

Keywords: precautionary saving; monetary policy (search for similar items in EconPapers)
Date: 2012-07
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