concept driving savings decisions, consumption allocations, prices and return volatilities. Surprisingly, due to the … equilibrium risk sharing, the precautionary savings motive in the aggregate can vastly exceed that of even the most prudent actual … agent in the economy. Consequently, a low real interest rate, resulting from large aggregate savings, can prevail with …

This paper studies the effects that borrowing constraints have on savings and growth and argues that, though they … increase savings, their effect on growth is ambiguous. Empirical evidence on the extent of borrowing constraints as well as … savings, investment, human capital accumulation and growth performance for industrialized countries is presented. A simple …

, which mitigates their precautionary savings motive and aggregate demand falls by less. Using a quantitative model analysis …