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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

Sustainability in a Risky World

Campbell, John Y.; Martin, Ian - National Bureau of Economic Research - 2021

We view sustainability as a requirement that welfare should not be expected to decline over time. We impose this … requirement as a prior constraint on the consumption-savings-investment problem, and study its implications for saving, risky …

Persistent link: https://www.econbiz.de/10012585383

Intergenerational Risksharing and Equilibrium Asset Prices

Campbell, John Y. - 2006

optimally shares risks across generations exposes future generations to a share of the risk in physical capital returns. Such a … system reduces precautionary saving and increases the risk-bearing capacity of the economy. Under plausible conditions it … increases the riskless interest rate, lowers the price of physical capital, and reduces the risk premium on physical capital …

Persistent link: https://www.econbiz.de/10012466465

Consumption and Risk Sharing Over the Life Cycle

Storesletten, Kjetil - 2000

.S. savings behavior. The restrictions imposed by general equilibrium theory play an important role in arriving at each of these … characteristics of idiosyncratic labor market risk. We find that uncertainty distributed throughout the working years accounts for 40 …

Persistent link: https://www.econbiz.de/10012470736

How Important is Precautionary Saving?

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

Precautionary Saving and Social Insurance

Hubbard, R. Glenn - 1994

Microdata studies of household saving often find a significant group in the population with virtually no wealth, raising concerns about heterogeneity in motives for saving. In particular, this heterogeneity has been interpreted as evidence against the life-cycle model of saving. This paper...

Persistent link: https://www.econbiz.de/10012474023

Fagereng, Andreas - 2017

response to earnings risk based on Euler equation estimates. To address endogeneity problems, we use Norwegian administrative …

Persistent link: https://www.econbiz.de/10012455500

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

Population, Productivity, and Sustainable Consumption

Pindyck, Robert S. - National Bureau of Economic Research - 2022

maximizes welfare. This raises a question: Given its cost, should sustainability be a social objective? …

Persistent link: https://www.econbiz.de/10013210047

Crunch Time : Fiscal Crises and the Role of Monetary Policy

Greenlaw, David - 2013

Countries with high debt loads are vulnerable to an adverse feedback loop in which doubts by lenders lead to higher sovereign interest rates which in turn make the debt problems more severe. We analyze the recent experience of advanced economies using both econometric methods and case studies...

Persistent link: https://www.econbiz.de/10012459364

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