scholarly journals The Excess Sensitivity of Layoffs and Quits to Demand

1984 ◽  
Vol 2 (2) ◽  
pp. 233-257 ◽  
Author(s):  
Robert E. Hall ◽  
Edward P. Lazear
Keyword(s):  
Excess Sensitivity

Excess sensitivity of consumption

2008 ◽  
Vol 3 (4) ◽  
pp. 378-389 ◽  
Author(s):  
Shengliang Deng ◽  
Xiaotong Jin
Keyword(s):  
Excess Sensitivity

The Precautionary Saving Model

2017 ◽  
Author(s):  
Tullio Jappelli ◽  
Luigi Pistaferri
Keyword(s):  
Liquidity Constraints ◽  
Precautionary Saving ◽  
Income Risk ◽  
Quadratic Utility ◽  
Excess Sensitivity

The chapter removes the assumption of quadratic utility and examines situations in which consumers respond to income risk by increasing current saving to protect against future shocks to income. This motive for saving is called precautionary saving, and it provides an explanation for some of the empirical findings in the literature, such as the observation that people with more volatile incomes tend to save more than individuals with more stable income patterns. Moreover, it can also explain the excess sensitivity of consumption to expected income changes. Indeed, a model with precautionary saving produces a good many predictions similar to those of the model with liquidity constraints.

Sign in / Sign up

Export Citation Format

Share Document