Precautionary Savings in the Great Recession
Ashoka Mody,
Damiano Sandri and
Franziska Ohnsorge
No 2012/042, 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: WP; saving rate; rate; saving; Precautionary savings; uncertainty; Great Recession; household savings; replacement rate; T-bill rate; investment risk; rate to a series; saving literature; response of the saving rate; unemployment insurance replacement rate; rate of return; evolution of savings rate; unemployment risk; Income; Disposable income; Unemployment rate; Consumption; Global (search for similar items in EconPapers)
Pages: 38
Date: 2012-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (101)
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) 
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:2012/042
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 Akshay Modi ().