Work

Consumption puzzles and precautionary savings

Year: 1990

Type: article

Abstract: When marginal utility is convex, agents accumulate savings as a precautionary measure against labor-income eventualities. This paper shows that precautionary savings can go a long way in making the excess-growth, excess-smoothness and excess-sensitivity features of consumption consistent with the stochastic processes of labor income observed in the U.S. at the microeconomic level.

Source: Journal of Monetary Economics

DOI: 10.1016/0304-3932(90)90048-9

Author: Ricardo J. Caballero

Institution: Columbia University

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,660