English, Article, Journal or magazine article edition: Precautionary Saving, the Current Account, and the International Distribution of Wealth Kenneth Beauchemin; Betty Daniel

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Bookmark: http://trove.nla.gov.au/version/137583
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Precautionary Saving, the Current Account, and the International Distribution of Wealth
Author
  • Kenneth Beauchemin
  • Betty Daniel
Physical Description
  • preprint
Notes
  • RePEc:wop:snyaec:00-01
  • This paper studies the interaction between time preference heterogeneity and precautionary saving in generating both persistent current account imbalance and a stationary equilibrium distribution of wealth across countries. We use numerical techniques to present two sets of results. First, when differences in discount factors are permanent and income is stochastic, the relatively patient country runs a current account surplus in transition to a steady state equilibrium. The impatient agent's precautionary motive to save yields an equilibrium distribution of wealth with no mass on the borrowing constraint. Second, when the difference in discount factors is stochastic, but highly persistent, persistent current account imbalance becomes a feature of equilibrium. Again, the precautionary motive keeps the economy out of corners. Together, stochastic discount factors and the precautionary motive imply an international distribution of wealth roughly consistent with data.
  • current account, uncertainty, precautionary saving
  • RePEc:nya:albaec:00-01
Language
  • English
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