Precautionary saving under liquidity constraints: Evidence from rural Pakistan

Journal of Development Economics

Volumn 91, Issue 1, 2010, Pages 77-86

  Lee, Jeong Joon ^a   Sawada, Yasuyuki ^b  

^a TOWSON UNIVERSITY   (United States)

^b UNIVERSITY OF TOKYO   (Japan)

Author keywords

Liquidity constraints; Precautionary saving; Prudence; Switching regression

Indexed keywords

CAPITAL MARKET; DEVELOPMENT ECONOMICS; RURAL ECONOMY; SAVINGS;

ASIA; EURASIA; PAKISTAN; SOUTH ASIA;

EID: 70349852667     PISSN: 03043878     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jdeveco.2009.05.001     Document Type: Article

References (56)

1. Alderman H. Saving and economic shocks in rural Pakistan. Journal of Development Economics 51 (1996) 343-365
2. Alderman H., and Garcia M. Poverty, household food security, and nutrition in rural Pakistan. IFPRI Research Report 96 (1993)
3. Alderman H., and Paxson C.H. Do the poor insure? A systhesis of the literature on risk and consumption in developing countries. Policy Research Working Paper 1008 (1992), World Bank
4. Armendáriz de Aghion B., and Morduch J. The economics of microfinance (2005), MIT Press, Massachusetts
5. Amemiya T. Advanced econometrics (1985), Harvard University Press, Harvard
6. Arrow K.J. Aspects of a theory of risk bearing. Yrj Hahnsson Foundation; Lectures (1965), Helsinki
7. Attanasio O., and Low H. Estimating Euler equations. Review of Economic Dynamics 7 (2004) 405-435
8. Banks J., Blundell R., and Brugiavini A. Risk pooling, precautionary saving and consumption growth. Review of Economic Studies 4 (2001) 757-779
9. Basu K., and Foster J. On measuring literacy. The Economic Journal 108 (1988) 1733-1749
10. Besley T. Nonmarket institutions for credit and risk sharing in low-income countries. Journal of Economic Perspectives 9 (1995) 115-127
11. Browning M., and Lusardi A. Household saving: micro theories and micro facts. Journal of Economic Literature 34 (1996) 1997-1855
12. Carroll C.D. Death to the log-linearized consumption Euler Equation! (and very poor health to the second-order approximation). Advances in Macroeconomics (2001) 1 (Article 6)
13. Carroll C.D., and Kimball M.S. Liquidity constraints and precautionary saving. NBER Working Paper #8496 (2001)
14. Carroll, C.D., Kimball, M.S., 2007. Precautionary saving and precautionary wealth. In: Blume, L., Durlauf, S. (Eds), The New Palgrave Dictionary of Economics, 2nd ed.
15. Chen Y., and Zhou L. How prudent are community representative consumers?. Topics in Economics 3 (2003) 1-18
16. Cox D., and Jimenez E. Achieving social objectives through private transfers. World Bank Research Observer 5 (1990) 205-218
17. In: Dercon S. (Ed). Insurance against poverty (2005), Oxford University Press, Oxford
18. Deaton A. Saving and liquidity constraints. Econometrica 69 (1991) 1221-1248
19. Dubois P., Jullien B., and Magnac T. Formal and informal risk sharing in LDCs: theory and empirical evidence. Econometrica 76 (2008) 679-725
20. Dynan K.E. How prudent are consumers?. Journal of Politcal Economy 101 (1993) 1104-1113
21. Eswaran M., and Kotwal A. Credit as insurance in agrarian economies. Journal of Development Economics 31 (1989) 37-53
22. Fafchamps M. Rural poverty, risk and development (2003), Edward Elgar, UK
23. Fafchamps M., Udry C., and Czukas K. Drought and saving in West Africa: are livestock a buffer stock?. Journal of Development Economics 55 (1998) 273-305
24. Garcia R., Lusardi A., and Ng S. Excess sensitivity and asymmetries in consumption: an empirical investigation. Journal of Money, Credit and Banking 29 (1997) 154-176
25. Gourinchas P., and Parker J. The empirical importance of precautionary saving. American Economic Review, Papers and Preceedings 91 (2001) 406-412
26. Hajivassiliou V., and Ioannides Y.M. Unemployment and liquidity constraints. Journal of Applied Econometrics 22 (2007) 479-510
27. Hayashi F. The effect of liquidity constraints on consumption: a cross-sectional analysis. Quarterly Journal of Economics 100 (1997) 183-206
28. Hori M., and Shimizutami S. Micro data studies on Japanese household consumption. International Economic Journal 20 (2006) 269-289
29. Jappelli T. Who is credit constrained in the U.S. economy?. Quarterly Journal of Economics 105 (1990) 219-234
30. Jappelli T., Pischeke J., and Souleles N. Testing for liquidity constraints in Euler equations with complementary data sources. Review of Economics and Statistics 2 (1998) 251-262
31. Kimball M.S. Precautionary saving in the small and in the large. Econometrica 58 (1990) 53-73
32. Kochar A. Smoothing consumption by smoothing income: hours-of-work responses to idiosyncratic agricultural shocks in rural India. Review of Economics and Statistics 81 (1999) 50-61
33. Krueger D., and Perri F. Does income inequality lead to consumption inequality? Evidence and theory. Review of Economic Studies 73 (2006) 163-193
34. Lee J.J., and Sawada Y. The degree of precautionary saving: a reexamination. Economics Letters 96 (2007) 196-201
35. Leland E.H. Savings and uncertainty: The precautionary demand for saving. Quarterly Journal of Economics 82 (1968) 465-473
36. Ludvigson S.C., and Paxson C.H. Approximation bias in linearized Euler equations. Review of Economics and Statistics 83 (2001) 242-256
37. Merrigan P., and Normandin M. Precautionary saving motives: an assessment from UK time series of cross-sections. Economic Journal 106 (1996) 1193-1208
38. Morduch, J. Risk, production and saving: theory and evidence from Indian households. Mimeo, Harvard University 1990.
39. Morduch J. Income smoothing and consumption smoothing. Journal of Economic Perspectives 9 (1995) 103-114
40. Nire M. Quantifying borrowing constraints and precautionary savings. Review of Economic Dynamics 9 (2006) 353-363
41. Ogaki M., and Zhang Q. Decreasing relative risk aversion and tests of risk sharing. Econometrica 69 (2001) 515-526
42. Park A. Risk and household grain management in developing countries. Economic Journal 116 (2006) 1088-1115
43. Parker J., and Preston P. Precautionary saving and consumption fluctuations. American Economic Review 95 (2005) 1119-1143
44. Pender J.L. Discount rates and credit markets: theory and evidence from rural India. Journal of Development Economics 50 (1996) 257-296
45. Pratt J.W. Risk aversion in the small and in the large. Econometrica 32 (1964) 122-136
46. Rosenzweig M.R., and Wolpin K. Credit constraints, consumption smoothing, and the accumulation of durable production assets in low-income countries: investments in bullocks in India. Journal of Political Economy 2 (1993) 223-244
47. Rosenzweig M.R. Savings behavior in low-income countries. Oxford Review of Economic Policy 17 (2001) 40-54
48. Samwick A. Patience, pensions, and saving. Manuscript, Department of Economics, Darthmouth College (2003)
49. Scott K. Credit. In: Margaret G., and Glewwe P. (Eds). Designing household survey questionnaires for developing countries: lessons from ten years of LSMS experience (2000)
50. Smith R.J., and Blundell R. An exogeneity test for a simultaneous equation Tobit model with an application to labor supply. Econometrica 54 (1986) 679-685
51. Townsend R.M. Risk and insurance in village India. Econometrica 62 (1994) 539-591
52. Townsend R.M. Consumption insurance: an evaluation of risk-bearing systems in low-income economies. Journal of Economic Perspectives 9 (1995) 83-102
53. Udry C.R. Risk and insurance in a rural credit market: an empirical investigation in northern Nigeria. Review of Economic Studies 61 (1994) 495-526
54. Xu X. Precautionary saving under liquidity constraints: a decomposition. International Economic Review 36 (1995) 675-690
55. Zeldes, S.P., 1984. Optimal Consumption with Stochastic Income. Ph.D. thesis, Massachusetts Institute of Technology.
56. Zeldes S.P. Consumption and liquidity constraints: an empirical investigation. Journal of Political Economy 97 (1989) 305-346