scholarly journals Precautionary Savings, Illiquid Assets, and the Aggregate Consequences of Shocks to Household Income Risk

Econometrica ◽  
2019 ◽  
Vol 87 (1) ◽  
pp. 255-290 ◽  
Author(s):  
Christian Bayer ◽  
Ralph Luetticke ◽  
Lien Pham-Dao ◽  
Volker Tjaden
Keyword(s):  
Household Income ◽  
Precautionary Savings ◽  
Income Risk ◽  
Illiquid Assets

scholarly journals The Power of Forward Guidance Revisited

2016 ◽  
Vol 106 (10) ◽  
pp. 3133-3158 ◽  
Author(s):  
Alisdair McKay ◽  
Emi Nakamura ◽  
Jón Steinsson
Keyword(s):  
Interest Rates ◽  
Borrowing Constraints ◽  
Precautionary Savings ◽  
Complete Markets ◽  
Income Risk ◽  
Forward Guidance ◽  
Highly Sensitive ◽  
Monetary Models ◽  
Central Tool ◽  
Far Future

In recent years, central banks have increasingly turned to forward guidance as a central tool of monetary policy. Standard monetary models imply that far future forward guidance has huge effects on current outcomes, and these effects grow with the horizon of the forward guidance. We present a model in which the power of forward guidance is highly sensitive to the assumption of complete markets. When agents face uninsurable income risk and borrowing constraints, a precautionary savings effect tempers their responses to changes in future interest rates. As a consequence, forward guidance has substantially less power to stimulate the economy. (JEL E21, E40, E50)

scholarly journals Fiscal Policy and MPC Heterogeneity

2014 ◽  
Vol 6 (4) ◽  
pp. 107-136 ◽  
Author(s):  
Tullio Jappelli ◽  
Luigi Pistaferri
Keyword(s):  
Precautionary Savings ◽  
Income Risk ◽  
Tax Reforms ◽  
Redistributive Policies ◽  
Italian Survey ◽  
Marginal Propensity To Consume ◽  
Transitory Income ◽  
Marginal Propensity ◽  
Household Responses ◽  
Substantial Heterogeneity

We use responses to survey questions in the 2010 Italian Survey of Household Income and Wealth that ask consumers how much of an unexpected transitory income change they would consume. The marginal propensity to consume (MPC) is 48 percent on average. We also find substantial heterogeneity in the distribution, as households with low cash-on-hand exhibit a much higher MPC than affluent households, which is in agreement with models with precautionary savings, where income risk plays an important role. The results have important implications for predicting household responses to tax reforms and redistributive policies. (JEL D12, D14, E21, E62, H23, H24)

scholarly journals Dynastic Precautionary Savings

2021 ◽  
Author(s):  
Corina Boar
Keyword(s):  
Panel Study ◽  
Precautionary Saving ◽  
Permanent Income ◽  
Precautionary Savings ◽  
Income Dynamics ◽  
Income Risk ◽  
Income Uncertainty ◽  
Parent Child

Abstract This article documents that parents accumulate savings to insure their children against income risk. I refer to this behaviour as dynastic precautionary saving. Using a sample of matched parent–child pairs from the Panel Study of Income Dynamics, I test for dynastic precautionary savings by examining the response of parental consumption to the child’s permanent income uncertainty. I exploit variation in permanent income risk across age and industry–occupation groups to confirm that, all else equal, higher uncertainty in the child’s permanent income depresses parental consumption, indicating a precautionary saving motive across generations.

scholarly journals Asset Poverty in Urban China: A Study Using the 2002 Chinese Household Income Project

2013 ◽  
Vol 42 (4) ◽  
pp. 763-781 ◽  
Author(s):  
JIN HUANG ◽  
MINCHAO JIN ◽  
SUO DENG ◽  
BAORONG GUO ◽  
LI ZOU ◽  
...  
Keyword(s):  
Household Income ◽  
Developed Countries ◽  
Poverty Rate ◽  
Urban China ◽  
Precautionary Savings ◽  
Income Poverty ◽  
Asset Poverty ◽  
Liquid Asset ◽  
Net Worth ◽  
Gap Ratio

AbstractDefining asset poverty as insufficiency of assets to satisfy household basic needs for a limited period of time, the study examines asset-poverty rates in urban China using the 2002 survey data from the Chinese Household Income Project (CHIP). We find that asset-poverty rates in urban China are lower than those of developed countries, in part due to Chinese households’ strong commitment to precautionary savings and the low poverty standards. However, the liquid asset-poverty rate is five times that of the income-poverty rate in urban China. Notably, the asset-poverty-gap ratio shows that most households in asset poverty have zero liquid assets or negative net worth. Asset building could be an integral part of the anti-poverty agenda to protect the poor from economic hardship and provide them with opportunities for economic growth.

scholarly journals A possibilistic and probabilistic approach to precautionary saving

2017 ◽  
Vol 64 (3) ◽  
pp. 273-295 ◽  
Author(s):  
Irina Georgescu ◽  
Adolfo Cristóbal-Campoamor ◽  
Ana Lucia-Casademunt
Keyword(s):  
Fuzzy Number ◽  
Mixed Models ◽  
Probabilistic Approach ◽  
Random Variable ◽  
Precautionary Saving ◽  
Optimal Choice ◽  
Background Risk ◽  
Precautionary Savings ◽  
Income Risk ◽  
Optimal Saving

This paper proposes two mixed models to study a consumer?s optimal saving in the presence of two types of risk: income risk and background risk. In the first model, income risk is represented by a fuzzy number and background risk by a random variable. In the second model, income risk is represented by a random variable and background risk by a fuzzy number. For each model, three notions of precautionary savings are defined as indicators of the extra saving induced by income and background risk on the consumer?s optimal choice. In conclusion, we can characterize the conditions that allow for extra saving relative to optimal saving under certainty, even when a certain component of risk is modelled using fuzzy numbers.

Commuting Trip Rate of the Private Cars Based on Differentiation of Household Income in Guangzhou

CICTP 2017 ◽  
2018 ◽  
Author(s):  
Jingxiang Huang ◽  
Yucong Hu ◽  
Manying Zhang ◽  
Yifei Shi
Keyword(s):  
Household Income

Endurance of Transnationalism in Bolivia’s Valle Alto

2006 ◽  
Vol 3 (1) ◽  
pp. 63-74 ◽  
Author(s):  
Richard C. Jones ◽  
Leonardo De la Torre
Keyword(s):  
Random Sample ◽  
Work Experience ◽  
Household Income ◽  
Return Migration ◽  
Ethnographic Interviews ◽  
The Us ◽  
Foreign Work ◽  
Intentions To Return ◽  
Economic Ties

The increasing difficulty of return migration and the demands for assimilation into host societies suggest a long-term cutting of ties to origin areas—likely accentuated in the Bolivian case by the recent shift in destinations from Argentina to the US and Spain. Making use of a stratified random sample of 417 families as well as ethnographic interviews in the provinces of Punata, Esteban Arze, and Jordán in the Valle Alto region the authors investigate these issues. Results suggest that for families with greater than ten years cumulated foreign work experience, there are significantly more absentees and lower levels of remittances as a percentage of household income. Although cultural ties remain strong after ten years, intentions to return to Bolivia decline markedly. The question of whether the dimunition of economic ties results in long-term village decline in the Valle Alto remains an unanswered.   

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