Dissecting saving dynamics: Measuring wealth, precautionary, and credit effects

Christopher Carroll, Jiri Slacalek and Martin Sommer

No 2012/10, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We argue that the US personal saving rate's long stability (1960s-1980s), subsequent steady decline (1980s-2007), and recent substantial rise (2008-2011) can be interpreted using a parsimonious buffer stock model of consumption in the presence of labor income uncertainty and credit constraints. Saving in the model is affected by the gap between target and actual wealth, with the target determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the long-term saving decline, while fluctuations in wealth and uncertainty capture the bulk of the business-cycle variation.

Keywords: Consumption; Saving; Wealth; Credit; Uncertainty (search for similar items in EconPapers)
JEL-codes: E21 E32 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

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Related works:
Working Paper: Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects (2019)
Working Paper: Dissecting saving dynamics: measuring wealth, precautionary and credit effects (2012)
Working Paper: Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects (2012)
Working Paper: Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:201210

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