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Saving on a Rainy Day, Borrowing for a Rainy Day


Type

Working Paper

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Authors

Alan, Sule 
Crossley, Thomas 
Low, Hamish 

Abstract

The aim of this paper is to understand what a recession means for individual consumers, and to model in a life-cycle framework how individuals respond to recessions. Our focus is on the sharp increase in savings rates that have been observed in the current and recent recessions. We show empirically that these saving spikes were short-lived and common to all working age groups. We then study life-cycle models in which recessions involve one or more of

Description

Keywords

credit constraints, savings, recessions, uncertainty

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Publisher

Faculty of Economics

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