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Carroll, Christopher D. - 1995

We estimate the fraction of the wealth of a sample of PSID respondents that is held because some households face greater income uncertainty than others. We first derive an equation characterizing the theoretical relationship between wealth and uncertainty in a buffer-stock model of saving. Next,...

Persistent link: https://www.econbiz.de/10012473685

Dissecting Saving Dynamics : Measuring Wealth, Precautionary, and Credit Effects

Carroll, Christopher D. - 2019

We show that an estimated tractable 'buffer stock saving' model can match the 30-year decline in the U.S. saving rate leading up to 2007, the sharp increase during the Great Recession, and much of the intervening business cycle variation. In the model, saving depends on the gap between 'target'...

Persistent link: https://www.econbiz.de/10012480077

A Tractable Model of Buffer Stock Saving

Carroll, Christopher D. - 2009

We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a … economy, where most modelers have chosen not to incorporate serious nonfinancial risk because available methods were too … most of the key implications of nonfinancial risk for intertemporal choice …

Persistent link: https://www.econbiz.de/10012463386

A Tractable Model of Precautionary Reserves, Net Foreign Assets, or Sovereign Wealth Funds

Carroll, Christopher D. - 2009

assets. The target is the level of assets that balances impatience, prudence, risk, intertemporal substitution, and the rate …

Persistent link: https://www.econbiz.de/10012463421

Liquidity Constraints and Precautionary Saving

Carroll, Christopher D. - 2001

first one, or the introduction of additional risks beyond a first risk, can actually reduce the precautionary saving motive …, because the new constraint or risk can hide' the effects of the preexisting constraints or risks …

Persistent link: https://www.econbiz.de/10012470222

A Theory of the Consumption Function, With and Without Liquidity Constraints (Expanded Version)

Carroll, Christopher D. - 2001

income risk, matches Milton Friedman's (1957) original description of the Permanent Income Hypothesis much better than the …

Persistent link: https://www.econbiz.de/10012470333

Precautionary Saving and the Marginal Propensity to Consume out of Permanent Income

Carroll, Christopher D. - 2001

The budget constraint requires that, eventually, consumption must adjust fully to any permanent shock to income. Intuition suggests that, knowing this, optimizing agents will fully adjust their spending immediately upon experiencing a permanent shock. However, this paper shows that if consumers...

Persistent link: https://www.econbiz.de/10012470491

Why Do the Rich Save So Much?

Carroll, Christopher D. - 1998

This paper considers several alternative explanations for the fact that households with higher levels of lifetime income ( the rich') have higher lifetime saving rates (Dynan, Skinner, and Zeldes (1996); Lillard and Karoly (1997)). The paper argues that the saving behavior of the richest...

Persistent link: https://www.econbiz.de/10012472259

Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis

Carroll, Christopher D. - 1996

This paper argues that the typical household's saving is better described by a "bufferstock" version than by the traditional version of the Life Cycle/Permanent Income Hypothesis (LC/PIH) model. Buffer-stock behavior emerges if consumers with important income uncertainty are sufficiently...

Persistent link: https://www.econbiz.de/10012473045

The Nature of Precautionary Wealth

Carroll, Christopher D. - 1995

This paper uses the Panel Study of Income Dynamics to provide some of the first direct evidence that wealth is systematically higher for consumers with greater income uncertainty. However, the apparent pattern of precautionary saving is not consistent with a standard parameterization of the life...

Persistent link: https://www.econbiz.de/10012473686