Series: IMF Working Papers
Author(s): Reda Cherif , and Fuad Hasanov
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 May 2012
Keywords: Volatility, risk, precautionary saving, buffer-stock, growth, investment rate, standard deviation, nonlinear relationship, correlation, statistics
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...