Precautionary Saving and Consumption Fluctuations
Jonathan Parker and
Bruce Preston
American Economic Review, 2005, vol. 95, issue 4, 1119-1143
Abstract:
This paper uses the consumption Euler equation to derive a decomposition of consumption growth into four sources. These four sources are new information, and three sources of predictable consumption growth: intertemporal substitution, changes in the preferences for consumption, and incomplete markets for consumption insurance. Using household-level data, we implement this decomposition for the average growth rate of consumption expenditures on nondurable goods in the United States from 1982 to 1997. The economic importance of precautionary saving rivals that of the real interest rate, but the relative importance of each source of movement in the volatility of consumption is not precisely measured.
Date: 2005
Note: DOI: 10.1257/0002828054825556
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)
Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/0002828054825556 (application/pdf)
http://www.aeaweb.org/aer/data/sept05_data_parker.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.
Related works:
Working Paper: Precautionary Saving and Consumption Fluctuations (2004) 
Working Paper: Precautionary Saving and Consumption Fluctuations (2002) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:95:y:2005:i:4:p:1119-1143
Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions
Access Statistics for this article
American Economic Review is currently edited by Esther Duflo
More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().