scholarly journals The Effect of Health and Employment Risks on Precautionary Savings

2011 ◽  
Author(s):  
Johannes Geyer
Keyword(s):  
Precautionary Savings

scholarly journals Economic policy uncertainty and investment in Spain

SERIEs ◽  
2021 ◽  
Author(s):  
Daniel Dejuan-Bitria ◽  
Corinna Ghirelli
Keyword(s):  
Adverse Effect ◽  
Economic Policy ◽  
Strong Evidence ◽  
Investment Decisions ◽  
Corporate Investment ◽  
Precautionary Savings ◽  
Marginal Effect ◽  
Policy Uncertainty ◽  
Economic Policy Uncertainty ◽  
High Uncertainty

AbstractThe aim of this paper is to investigate the effect of economic policy uncertainty on firms’ investment decisions. We focus on Spain for the period 1998–2014. To measure policy-related uncertainty, we borrow the economic policy uncertainty (EPU) indicator available for this country. We find strong evidence that uncertainty reduces corporate investment. This relationship appears to be nonlinear, being the marginal effect of uncertainty attenuated toward zero during periods of high uncertainty levels. Furthermore, the heterogeneous results suggest that the adverse effect of uncertainty is particularly relevant for highly vulnerable firms. Overall, these results are consistent with the hypotheses that economic policy-related uncertainty reduces corporate investment through increases in precautionary savings or to worsening of credit conditions.

Financial Integration, Savings Gluts, and Asset Price Booms

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Felix Zhiyu Feng ◽  
Will Jianyu Lu ◽  
Caroline H. Zhu
Keyword(s):  
Financial Integration ◽  
Asset Price ◽  
Substitution Effect ◽  
Wealth Effect ◽  
Precautionary Savings ◽  
Domestic Capital ◽  
Borrowing Constraint ◽  
Savings Rate ◽  
Financing Costs ◽  
Capital Outflows

AbstractCapital outflows after financial integration can lead to simultaneous increases in the national savings rate and asset prices of an economy with substantial financing costs. Under autarky, firms invest in risky capital while facing a borrowing constraint that creates a need for precautionary savings. Financial integration provides firms with access to foreign risk-free assets and results in two effects: a substitution effect, whereby firms divert some investments to foreign assets and cause capital outflows; and a wealth effect, whereby they grow richer in equilibrium and thus demand more domestic capital. Savings gluts and asset price booms occur when the wealth effect dominates.

scholarly journals Keynes on Expectations, Uncertainty and Defensive Behavior

2015 ◽  
Vol 1 (1) ◽  
pp. 44-54 ◽  
Author(s):  
Fernando J. Cardim de Carvalho
Keyword(s):  
General Theory ◽  
Defensive Behavior ◽  
Economic Behavior ◽  
Precautionary Savings ◽  
Close Attention ◽  
Economic Agents ◽  
Milton Friedman ◽  
Mechanistic Approach ◽  
Fundamental Uncertainty ◽  
Conventional Behavior

Keynesianism dominated macroeconomics until the early 1970s in the form of what was called hydraulic Keynesianism, a fundamentally mechanistic approach that assumed that economic agents always reacted in the same way to a certain set of stimuli. The dominance of hydraulic Keynesianism opened the way for the emerging criticism, first by Milton Friedman, and later by New Classical economists, that Keynesianism had no place for expectations. Keynes, however, dedicated close attention to the ways expectations were formed under fundamental uncertainty and how economic behavior was changed when agents acknowledged that the future was uncertain. For Keynes, acknowledging uncertainty meant that agents sought to take precautions against the possibility that their expectations were wrong and the decisions relying on them were incorrect. In The General Theory, Keynes showed that, in practically all fields, behavior would be significantly changed when agents acknowledged uncertainty. Precautionary savings, liquidity preference, conventional behavior, were all particular manifestations of the attempt to get protection against the losses that could result from the disappointment of expectations.

War Chests as Precautionary Savings

2004 ◽  
Vol 26 (4) ◽  
pp. 289-315 ◽  
Author(s):  
Jay Goodliffe
Keyword(s):  
Precautionary Savings
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