English, Article edition: Quantifying Borrowing Constraints and Precautionary Savings Makoto Nirei

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Physical Description
  • article
Language
  • English

Edition details

Title
  • Quantifying Borrowing Constraints and Precautionary Savings
Author
  • Makoto Nirei
Physical Description
  • article
Notes
  • This paper quantifies the effects of precautionary savings. It demonstrates that Zeldes' estimate (1989) of excess consumption growth for low asset holders is consistent with a dynamic general equilibrium model with uninsurable endowment shocks when borrowing is constrained at three months' worth of average wage income. I propose a Monte Carlo simulation of the stationary equilibrium as a method of indirectly testing the hypotheses of a no-borrowing specification and a natural debt limit specification. At the estimated borrowing constraint, an increase in endowment shocks within the range of empirical findings can cause a 1.6% increase in the savings rate and a 6.9% increase in capital. (Copyright: Elsevier)
  • liquidity constraint; precautionary savings; borrowing constraint; natural debt limit; excess consumption growth; uninsured endowment shock
  • RePEc:red:issued:v:9:y:2006:i:2:p:353-363
Language
  • English
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