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Buffer-stock saving in a Krusell–Smith world

Christopher Carroll, Jiri Slacalek () and Kiichi Tokuoka ()

Economics Letters, 2015, vol. 132, issue C, 97-100

Abstract: We modify the widely-used Krusell and Smith (1998) model (KS) to accommodate an income process with permanent and transitory components. Appropriately calibrated permanent shocks help explain a substantial part of the empirical wealth heterogeneity unexplained in the baseline KS model.

Keywords: Household income process; Wealth inequality; Household heterogeneity (search for similar items in EconPapers)
JEL-codes: D12 D31 D91 E21 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Buffer-stock saving in a Krusell-Smith world (2014) Downloads
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DOI: 10.1016/j.econlet.2015.04.021

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