Title of article
Precautionarysavingandthemarginalpropensitytoconsumeoutof permanentincome
Author/Authors
ChristopherD.Carroll، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
11
From page
780
To page
790
Abstract
The budgetconstraintrequiresthat,eventually,consumptionmustadjustfullytoany
permanentshocktoincome.Intuitionsuggeststhat,knowingthis,optimizingagents
willfullyadjusttheirspendingimmediatelyuponexperiencingapermanentshock.
However,thispapershowsthatifconsumersareimpatientandaresubjecttotransitory
as wellaspermanentshocks,theoptimalmarginalpropensitytoconsumeoutof
permanentshocks(theMPCP)isstrictlylessthanone,becausebuffer-stocksavershave
a targetwealth-to-permanent-income ratio; apositiveshocktopermanentincome
movestheratiobelowitstarget,temporarilyboostingsaving
Keywords
RiskUncertaintyConsumptionPrecautionary savingBuffer-stocksavingPermanent incomehypothesis
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846331
Link To Document