Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153907
Authors: 
Carroll, Christopher
Slacalek, Jiri
Sommer, Martin
Year of Publication: 
2012
Series/Report no.: 
ECB Working Paper 1474
Abstract: 
We argue that the U.S. personal saving rate's long stability (from the 1960s through the early 1980s), subsequent steady decline (1980s-2007), and recent substantial increase (2008-2011) can all be interpreted using a parsimonious `buffer stock' model of optimal 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 wealth determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the saving rate's long-term decline, while fluctuations in net wealth and uncertainty capture the bulk of the business-cycle variation.
Subjects: 
Consumption
credit availability
saving
uncertainty
wealth
JEL: 
E21
E32
Document Type: 
Working Paper

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