Prudence and precautionary saving |
| |
Authors: | Luigi Ventura Joseph G Eisenhauer |
| |
Institution: | (1) Dipartimento di Scienze Economiche, Università di Roma “La Sapienza”, Roma, Italy;(2) Department of Economics and Finance, Canisius College, Buffalo, USA |
| |
Abstract: | Households save income for various reasons, including the need to plan for the future, the intention to leave a bequest, and
the desire to guard against unforeseen expenditures and income fluctuations. Although it is widely believed that prudent individuals
engage in precautionary saving, the extent of such saving is not well understood. This paper develops a model of saving with
an explicit role for the Leland-Kimball measure of prudence. Estimation of the model using household-level data from Italy
suggests an average value of relative prudence near 4 or 5, with approximately 15 to 36 percent of total saving being precautionary.
The authors are grateful to an anonymous referee for helpful comments. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|