Precautionary Savings in the Great Recession:

Heightened uncertainty since the onset of the Great Recession has materially increased saving rates, contributing to lower consumption and GDP growth. Consistent with a model of precautionary savings in the face of uncertainty, we find for a panel of advanced economies that greater labor income unce...

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Bibliographic Details
Main Author: Mody, Ashoka (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2012
Series:IMF Working Papers Working Paper No. 12/42
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Summary:Heightened uncertainty since the onset of the Great Recession has materially increased saving rates, contributing to lower consumption and GDP growth. Consistent with a model of precautionary savings in the face of uncertainty, we find for a panel of advanced economies that greater labor income uncertainty is significantly associated with higher household savings. These results are robust to controlling for other determinants of saving rates, including wealth-to-income ratios, the government fiscal balance, demographics, credit conditions, and global growth and financial stress. Our estimates imply that at least two-fifths of the sharp increase in household saving rates between 2007 and 2009 can be attributed to the precautionary savings motive
Physical Description:1 Online-Ressource (38 p)
ISBN:1463936435
9781463936433

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