The volatility trap : precautionary saving, investment, and aggregate risk /

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Bibliographic Details
Author / Creator:	Cherif, Reda, author.
Imprint:	[Washington, D.C.] : International Monetary Fund, ©2012.
Description:	1 online resource (21 pages) : illustrations
Language:	English
Series:	IMF working paper ; WP/12/134 IMF working paper ; WP/12/134.
Subject:	Saving and investment -- Econometric models. Risk -- Econometric models. Risk -- Econometric models. Saving and investment -- Econometric models.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12500248

Hidden Bibliographic Details
Other authors / contributors:	Hasanov, Fuad, 1978- author. International Monetary Fund. Institute for Capacity Development, issuing body.
ISBN:	1475570694 9781475570694 1475503865 9781475503869 9781475503869
Digital file characteristics:	data file
Notes:	Title from PDF title page (IMF Web site, viewed June 1, 2012). "Institute for Capacity Development." "May 2012." Includes bibliographical references.
Summary:	We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store-or-sow" model of growth. High volatility of permanent shocks results in high precautionary saving in the safe asset and low investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical evidence shows a nonlinear relationship between investment and saving and that investment is a hump-shaped function of the volatility of permanent shocks, as predicted by the model
Other form:	Print version: Cherif, Reda. Volatility Trap: Precautionary Saving, Investment, and Aggregate Risk. Washington : International Monetary Fund, ©2012 9781475503869

Table of Contents:

Cover; Abstract; Contents; Introduction; II. A "Store-or-Sow" Model of Precautionary Saving and Investment; III. Results and Implications; Figures; 1. Precautionary Saving and the Golden Rule Investment Rate; 2. A Phase Diagram of Precautionary Saving and Investment Rates; 3. Precautionary Saving and Investment Rates vs. Volatility of Permanent Shocks; 4. Precautionary Saving and Investment Rates vs. Volatility of Temporary Shocks; IV. An Empirical Relationship Among Investment, Saving, and Volatility; Tables; 1. Saving, Investment, and Volatility: Descriptive Statistics.
5. Saving vs. Investment6. Saving vs. Investment-Saving Ratio; V. Concluding Remarks; 2. Panel Fixed Effects Regressions; References; Appendix Table. Average Investment, Saving, and Volatility (1970-2008).

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