Over the last two decades, cash holdings in nonfinancial firms around the world have increased. This phenomenon is …-sustaining growth based on private consumption and investment. This paper finds that Japanese nonfinancial firms have accumulated cash … at the expense of investment and dividends, hampering this transition. The evidence suggests that cash accumulation is …

We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store … investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks … leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical …

reallocated from the private to the public sectors, reducing investment and deepening the recessions even further. To account for …. This implies that domestic debt purchases displace productive investment. The model shows that these purchases reduce …