Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/72011 
Year of Publication: 
2004
Series/Report no.: 
Working Paper No. 517
Publisher: 
The Johns Hopkins University, Department of Economics, Baltimore, MD
Abstract: 
Buffer-stock versions of the dynamic stochastic optimizing model of saving are now standard in the consumption literature. This paper builds theoretical foundations for rigorous understanding of the main characteristics of buffer stock models, including the existence of a target level of wealth and the proposition that aggregate consumption growth equals aggregate income growth in a small open economy populated by buffer stock consumers.
Subjects: 
Precautionary saving
buffer stock saving
marginal propensity to consume
permanent income hypothesis
JEL: 
D81
D91
E21
Document Type: 
Working Paper

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