We present a qualitative and quantitative analysis of the standard growth model modified to
include precautionary saving motives and liquidity constraints. We address the impact on the …

This paper augments the neoclassical growth model to study the macroeconomic effects of
uninsured idiosyncratic investment, or capital-income, risk. Under standard assumptions for …

Recent empirical evidence supports the view that the income process has an individual-
specific growth rate component [Baker, M., 1997. Growth-rate heterogeneity and the …

One of the basic motives for saving is the accumulation of wealth to ensure future welfare.
Both introspection and extant research on consumption insurance find that people face …

When marginal utility is convex, agents accumulate savings as a precautionary measure
against labor-income eventualities. This paper shows that precautionary savings can go a …

How does risk affect saving? Empirical work typically examines the effects of detectible
differences in risk within the data. How these differences affect saving in theoretical models …

This paper argues that precautionary savings due to uninsurable earnings uncertainty are
likely to be an important source of aggregate wealth accumulation. The stylized model …

In this paper we model the evolution of income risk and consumption growth. We
decompose the time series innovation of the income process into its common and cohort …

The importance of precautionary motives in explaining individual and aggregate saving* Page
1 Carnegie-Rochester Conference Series on Public Policy 40 (1994) 59-125 North-Holland The …

The life-cycle-permanent-income model has been the primary theoretical framework for
research on saving. The basic intuition of the model is that households should smooth …