EconPapers    
Economics at your fingertips  
 

Uninsured idiosyncratic risk and aggregate saving

S. Aiyagari

No 502, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: We find that precautionary saving accounts for only a modest (less than 3 percentage point) increase in the aggregate saving rate, at least for moderate and empirically plausible parameter values. This finding is based on a quantitative analysis of a reasonably parameterized version of the standard growth model modified to include a large number of agents who receive uninsured idiosyncratic labor endowment shocks. In contrast to representative agent models, asset trading is quite important to individuals. The model can also account qualitatively for the positive skewness of wealth and income distributions, and significantly greater wealth inequality compared to income inequality.

Keywords: Saving and investment; Risk (search for similar items in EconPapers)
Date: 1993
References: Add references at CitEc
Citations: View citations in EconPapers (49)

Published in Quarterly Journal of Economics (Vol. 109, No. 3, August 1994, pp. 659-684)

Downloads: (external link)
http://www.minneapolisfed.org/research/common/pub_detail.cfm?pb_autonum_id=589 (application/pdf)
http://www.minneapolisfed.org/research/WP/WP502.pdf

Related works:
Journal Article: Uninsured Idiosyncratic Risk and Aggregate Saving (1994) Downloads
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:fip:fedmwp:502

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().

 
Page updated 2025-03-30
Handle: RePEc:fip:fedmwp:502