The objective of this manuscript is to provide a simple guide to instructors and students on how to solve and simulate a discrete-time specification of the Life-Cycle/Permanent-Income Model of Consumption and Saving (LCPI Model) using only algebra and basic calculus. The solution and simulation...

Key economic concepts of saving and investment are defined and discussed in this paper. It is shown that the equation “saving=investment” is a fundamental fallacy of macroeconomics due to a confusion between real and financial variables, and also between stock and flow variables. Economic...

This article aims to assess the saving behaviour of Lithuanian high school students. The survey questioned their ability to save, saving level, regularity in saving, saving motives, attitude towards saving, saving motivation and confidence in the saving skills of Lithuanian high school students....

The notion of savings in economics has a variety of mutually incompatible meanings. This paper goes through various interpretations of the term and argues that, for the sake of clarity, it can and should be replaced with more precise terms. In order to show the significance of doing so, the...

With over 25% of Savings rate, India is amongst one of the top countries saving her income. Question is, can India utilize these savings to fuel her future growth. With this hidden treasure, does India still need to be dependent on Foreign money? Read on and appreciate the power of India's savings

American households have received a triple dose of bad news since the beginning of the current recession: The greatest collapse in asset values since the Great Depression, a sharp tightening in credit availability, and a large increase in unemployment risk. We present measures of the size of...

We present a tractable model of the effects of nonfinancial risk on intertemporal choice. Our purpose is to provide a simple framework that can be adopted in fields like representative-agent macroeconomics, corporate finance, or political economy, where most modelers have chosen not to...

Risk may induce precautionary saving but it can also reduce saving. The theoretical literature recognizes both possibilities, but favors a positive effect (both for developed and developing countries); the empirical literature is divided, reporting (small) positive effects for developed...

This paper investigates empirically why Japan's household savings rate fell in the 1990s. We constructed an economic model consisting of two types of household: unconstrained life-cycle households and liquidity-constrained households. Unconstrained households generally save, but...

In an overlapping generations maximization framework with consumers, whose information on uncertain future income realizations is front loaded, a closed form aggregate consumption function with CRRA preferences is derived. To have a closed form solution we assume that consumers solve their...