Mainstream economic theories of saving are implicitly individualistic and generate predictions that are difficult to reconcile with the Chinese experience. In China, saving is a family affair. This paper constructs a model of household saving based on a three-period, two-sided altruistic...

Despite the centrality of credit and debt in the financial lives of Americans, little is known about how U.S. consumers' access and utilization of credit changes in the short and long term, and how these changes are related to changes in U.S. consumers' debt. This paper uses data from the...

This paper shows that uninsured risk and borrowing constraints can make an individual's marginal propensity to consume negatively dependent on his/her permanent income. Therefore, higher income growth can lead to higher saving rates without requiring (or causing) high interest rates – in sharp...

We study an optimal portfolio and consumption choice problem of family that combines life insurance of parents who receive deterministic labor income until the fixed time T. We consider utility functions of parents and children separately and assume that parents have uncertain lifetime. If...

This paper investigates the impact of the desire to keep up with the Joneses (KUJ) on economic growth and optimal tax policy in a continuous time overlapping generations model with AK technology and gradual retirement. Due to the desire to KUJ, the propensity to consume out of total wealth rises...

It has been argued that increased life expectancy raises the rate of return on education, causing a rise in the investment in education followed by an increase in lifetime labor supply. Empirical evidence of these relations is rather weak. Building on a lifecycle model with uncertain longevity,...

This paper assesses the impact of different quantitative approaches to regulate investment risk on the retirement income stemming from defined contribution (DC) pension plans. It looks at how such regulations affect the spectrum of investment policies available and, through this channel, how...

The profession has been longing for closed-form solutions to consumption functions under uncertainty and borrowing constraints. This paper proposes an analytical approach to solving general-equilibrium buffer-stock saving models with both idiosyncratic and aggregate uncertainties as well as...

This paper investigates household decisions, and optimal taxation in an overlapping generations model in which individual utility depends on a weighted average of consumption of ones peers - a "keeping up with the Joneses'' consumption externality. In contrast to representative agent economies,...

A major challenge in the study of saving behavior is how to disentangle different motives for saving. We approach this question in the context of an entire life-cycle model. Specifically, we identify the importance of different saving motives by simultaneously accounting for wealth accumulation...