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Earnings, Consumption and Lifecycle Choices

Meghir, Costas - 2010

We discuss recent developments in the literature that studies how the dynamics of earnings and wages affect consumption … choices over the life cycle. We start by analyzing the theoretical impact of income changes on consumption - highlighting the … role of persistence, information, size and insurability of changes in economic resources. We next examine the empirical …

Persistent link: https://www.econbiz.de/10012462738

Precautionary Saving in a Financially-Constrained Firm

Abel, Andrew B. - 2020

For a firm that cannot raise external funds, cash on hand serves as precautionary saving. We derive a closed-form expression for the target level of cash on hand in the presence of persistent cash flows. Contrary to conventional wisdom, a mean-preserving increase in the volatility of cash flow...

Persistent link: https://www.econbiz.de/10012479152

Perceived Precautionary Savings Motives : Evidence from FinTech

D’Acunto, Francesco - 2020

We study the spending response of first-time borrowers to an overdraft facility and elicit their preferences, beliefs, and motives through a FinTech application. Users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary...

Persistent link: https://www.econbiz.de/10012482026

Policy Uncertainty and Precautionary Savings

Giavazzi, Francesco - 2008

In 1997 Chancellor Kohl proposed a major pension reform and pushed the law through Parliament explaining that the German PAYG system had become unsustainable. One limitation of the new law -- one that is crucial for our identification strategy -- is that it left the generous pension entitlements...

Persistent link: https://www.econbiz.de/10012464736

Precautionary Saving and the Marginal Propensity to Consume

Kimball, Miles S. - 1990

The marginal propensity to consume out of wealth is important for evaluating the effects of taxation on consumption … consumption. It is also a component of the interest elasticity of consumption and the risk aversion of the value function which …

Persistent link: https://www.econbiz.de/10012475630

Optimal Taxes on Capital in the OLG Model with Uninsurable Idiosyncratic Income Risk

Krueger, Dirk - 2018

We characterize the optimal linear tax on capital in an Overlapping Generations model with two period lived households facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium feedback of private precautionary saving. For logarithmic utility...

Persistent link: https://www.econbiz.de/10012453379

Understanding the Rise in Corporate Cash : Precautionary Savings or Foreign Taxes

Faulkender, Michael W. - 2017

What has driven the dramatic rise in U.S. corporate cash? Using non-public data, we show that the run-up is not uniform across firms and is greatest in the foreign subsidiaries of multinational firms. Standard precautionary motives explain only domestic cash holdings, not the burgeoning foreign...

Persistent link: https://www.econbiz.de/10012453912

Multiple Equilibria in Open Economy Models with Collateral Constraints : Overborrowing Revisited

Schmitt-Grohé, Stephanie - 2016

This paper establishes the existence of multiple equilibria in infinite-horizon open- economy models in which the value of tradable and nontradable endowments serves as collateral. In this environment, the economy displays self-fulfilling financial crises in which pessimistic views about the...

Persistent link: https://www.econbiz.de/10012456411

Optimal Reserves in Financially Closed Economies

Jeanne, Olivier - 2016

Financially closed economies insure themselves against current-account shocks using international reserves. We characterize the optimal management of reserves using an open-economy model of precautionary savings and emphasize several results. First, the welfare-based opportunity cost of reserves...

Persistent link: https://www.econbiz.de/10012456536

Savings After Retirement : A Survey

De Nardi, Mariacristina - 2015

The saving patterns of retired U.S. households pose a challenge to the basic life-cycle model of saving. The observed patterns of out-of-pocket medical expenses, which rise quickly with age and income during retirement, and heterogeneous lifespan risk, can explain a significant portion U.S....

Persistent link: https://www.econbiz.de/10012457399

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