Showing papers on "Precautionary savings published in 1968"

Saving and Uncertainty: The Precautionary Demand for Saving

Abstract: Publisher Summary This chapter discusses a two-period model developed to analyze rigorously the precautionary demand for saving. The precautionary demand for saving is usually described as the extra saving caused by future income being random rather than determinate. The effect of uncertainty on saving becomes obfuscated by generality. Many of the usual outlets for consumer saving, including saving deposits and government bonds, offer a fixed monetary rate of return. A multi-period model would be necessary to explore fully the effect of assets on the precautionary demand for saving. Until further progress is made with the more powerful inter-temporal models of optimization under uncertainty, the two-period model must be accepted along with its conclusion that states that under reasonable assumptions, there exists a positive precautionary demand for saving.