EconPapers    
Economics at your fingertips  
 

Precautionary Savings in the Great Recession

Ashoka Mody, Damiano Sandri () and Franziska Ohnsorge

No 12/42, IMF Working Papers from International Monetary Fund

Abstract: Heightened uncertainty since the onset of the Great Recession has materially increased saving rates, contributing to lower consumption and GDP growth. Consistent with a model of precautionary savings in the face of uncertainty, we find for a panel of advanced economies that greater labor income uncertainty is significantly associated with higher household savings. These results are robust to controlling for other determinants of saving rates, including wealth-to-income ratios, the government fiscal balance, demographics, credit conditions, and global growth and financial stress. Our estimates imply that at least two-fifths of the sharp increase in household saving rates between 2007 and 2009 can be attributed to the precautionary savings motive.

Keywords: Economic recession; Economic models; Economic growth; Developed countries; Cross country analysis; Private consumption; Precautionary savings; uncertainty, Great Recession, unemployment, disposable income, unemployment rate, income growth, labor income, Economic Growth of Open Economies, (search for similar items in EconPapers)
Pages: 38
Date: 2012-02-01
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47) Track citations by RSS feed

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=25708 (application/pdf)

Related works:
Journal Article: Precautionary Savings in the Great Recession (2012) 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:imf:imfwpa:12/42

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Jim Beardow ().

 
Page updated 2020-02-12
Handle: RePEc:imf:imfwpa:12/42