Dissecting Saving Dynamics: Measuring Wealth, Precautionary, and Credit Effects / Christopher D. Carroll, Jiri Slacalek, Martin Sommer.

Format:

Book

Author/Creator:

Carroll, Christopher D.

Contributor:

Slacalek, Jiri.

Sommer, Martin.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26131.

NBER working paper series no. w26131

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Dissecting Saving Dynamics

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We show that an estimated tractable 'buffer stock saving' model can match the 30-year decline in the U.S. saving rate leading up to 2007, the sharp increase during the Great Recession, and much of the intervening business cycle variation. In the model, saving depends on the gap between 'target' and actual wealth, with the target determined by measured credit availability and measured unemployment expectations. Following financial deregulation starting in the late 1970s, expanding credit supply explains the trend decline in saving, while fluctuations in wealth and consumer-survey-measured unemployment expectations capture much of the business-cycle variation, including the sharp rise during the Great Recession.

Notes:

Print version record

August 2019.