Economists working with numerical solutions to the optimal consumption/saving problem under uncertainty have long known … rigorous basis for the oft-noted similarity between the effects of introducing uncertainty and introducing constraints by … showing that in both cases the effects spring from the concavity in the consumption function which either uncertainty or …

credit constraints; (iv) asset market crashes. In simulations and in the data we aggregate explicitly from individual … behavior. We model credit tightening as a constraint on new borrowing and this generates an option value of borrowing in good … times. We show that the rise in the aggregate savings ratio is driven by increases in uncertainty, rather than tighening of …

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 …