Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101358
Authors: 
Carroll, Christopher
Slacalek, Jiri
Sommer, Martin
Year of Publication: 
2012
Series/Report no.: 
Working Papers, The Johns Hopkins University, Department of Economics 602
Abstract: 
We argue that the U.S. personal saving rate's long stability (1960s-1980s), subsequent steady decline (1980s-2007), and recent substantial rise (2008-2011) can be interpreted using a parsimonious 'buffer stock' model of consumption in the presence of labor income uncertainty and credit constraints. Saving in the model is affected by the gap between 'target' and actual wealth, with the target determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the long-term saving decline, while fluctuations in wealth and uncertainty capture the bulk of the business-cycle variation.
Subjects: 
Consumption
Saving
Wealth
Credit
Uncertainty
JEL: 
E21
E32
Document Type: 
Working Paper

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