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Taxation of Labor Income and the Demand for Risky Assets

Elmendorf, Douglas W. - 2010

techniques from the theory of multiple risk-bearing. Applying this analysis, the effect of labor income taxes on the demand for …The effect of uninsured labor income risk on the joint saving/portfolio composition decision is analyzed using new …

Persistent link: https://www.econbiz.de/10012762700

Interest Rate Uncertainty and Sovereign Default Risk

Johri, Alok; Khan, Shahed; Sosa‐Padilla, César - 2022

Empirical studies suggest that fluctuations in the level and volatility of the world interest rate (as measured by the US treasury bill rate) affect sovereign spreads in emerging economies. We incorporate an estimated time-varying process for the world interest rate (with both level and...

Persistent link: https://www.econbiz.de/10013405012

Dissecting Saving Dynamics : Measuring Wealth, Precautionary, and Credit Effects

Carroll, Chris - 2019

We show that an estimated tractable ‘buffer stock saving' model can match the 30-year decline in the U.S. saving rate leading up to 2007, the sharp increase during the Great Recession, and much of the intervening business cycle variation. In the model, saving depends on the gap between...

Persistent link: https://www.econbiz.de/10012865275

Optimal Portfolio Choice for Long-Horizon Investors with Nontradable Labor Income

Viceira, Luis M. - 2001

income risk on savings and portfolio choice and finds that, when labor income risk is independent of stock market risk, a …This paper analyzes optimal portfolio decisions of long-horizon investors with undiversifiable labor income risk and … exogenous expected retirement and lifetime horizons. It shows that the fraction of savings optimally invested in stocks is …

Persistent link: https://www.econbiz.de/10012788168

Declining Labor Shares and the Global Rise of Corporate Saving

Karabarbounis, Loukas - 2012

The stability of the labor share is a key foundation in macroeconomic models. We document, however, that the global labor share has significantly declined over the last 30 years. This decline was associated with a significant increase in corporate saving, generally the largest component of...

Persistent link: https://www.econbiz.de/10013105000

Fagereng, Andreas - 2017

response to earnings risk based on Euler equation estimates. To address endogeneity problems, we use Norwegian administrative … because firms pass some of their productivity shocks onto wages; moreover, for most workers firm shocks are hard to avoid. Our …

Persistent link: https://www.econbiz.de/10012962717

Incidental Bequests and the Choice to Self-Insure Late-Life Risks

Lockwood, Lee - 2014

Despite facing significant uncertainty about their lifespans and health care costs, most retirees do not buy annuities or long-term care insurance. In this paper, I find that retirees' saving and insurance choices are highly inconsistent with standard life cycle models in which people care only...

Persistent link: https://www.econbiz.de/10013040235

Approximation Bias in Linearized Euler Equations

Paxson, Christina H.; Ludvigson, Sydney C. - 2021

(and the coefficient of relative risk aversion) from regressions of consumption growth on uncertainty in consumption growth … imply estimates of prudence and risk aversion that are unrealistically low. Using numerical solutions to a fairly standard …

Persistent link: https://www.econbiz.de/10013245738

Precautionary Saving in a Financially-Constrained Firm

Abel, Andrew B.; Panageas, Stauros - 2022

For a firm that cannot raise external funds, cash on hand serves as precautionary saving. We derive a closed-form expression for the target level of cash on hand in the presence of persistent cash flows. Contrary to conventional wisdom, a mean-preserving increase in the volatility of cash flow...

Persistent link: https://www.econbiz.de/10013324672

Consumption and Risk Sharing Over the Life Cycle

Storesletten, Kjetil; Telmer, Chris I.; Yaron, Amir - 2021

.S. savings behavior. The restrictions imposed by general equilibrium theory play an important role in arriving at each of these … characteristics of idiosyncratic labor market risk. We find that uncertainty distributed throughout the working years accounts for 40 …

Persistent link: https://www.econbiz.de/10013229110