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Economic Shocks and Savings Behavior by the Rural Poor


  • Julia Paxton

    () (Ohio University)

  • Fan Zhuo

    () (Boston University)


Using data from 587 marginalized cooperative member households in rural Mexico, this paper examines how household formal financial savings fluctuates with economic shocks and other relevant variables. Regression results show that negative shocks, income, wealth, formal credit, distance from a bank branch, percent of non-working members in a household, and education have a significant influence on formal financial savings. Results from quantile regression show that the impact of negative shocks on formal savings is only statistically significant in households with a high propensity to save. These precautionary savings households not only save more, but are inclined to withdraw savings to alleviate potentially adverse personal income trends associated with the shocks.

Suggested Citation

  • Julia Paxton & Fan Zhuo, 2011. "Economic Shocks and Savings Behavior by the Rural Poor," Economics Bulletin, AccessEcon, vol. 31(4), pages 3286-3293.
  • Handle: RePEc:ebl:ecbull:eb-11-00592

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    References listed on IDEAS

    1. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
    2. Lee, Jeong-Joon & Sawada, Yasuyuki, 2010. "Precautionary saving under liquidity constraints: Evidence from rural Pakistan," Journal of Development Economics, Elsevier, vol. 91(1), pages 77-86, January.
    3. George-Marios Angeletos, 2001. "The Hyberbolic Consumption Model: Calibration, Simulation, and Empirical Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 47-68, Summer.
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    More about this item


    Mexico; precautionary savings; quantile regression;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • D1 - Microeconomics - - Household Behavior


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