-cycle framework how individuals respond to recessions. Our focus is on the sharp increase in savings rates that have been observed in … negative shock to individual income; (ii) an increase in the variance of idiosyncratic permanent shocks; (iii) a tightening of … times. We show that the rise in the aggregate savings ratio is driven by increases in uncertainty, rather than tightening of …

savings while a decreased variation in earnings decrease saving. Not accounting for the effect on expected earnings on saving …