IDEAS home Printed from https://ideas.repec.org/p/nya/albaec/00-01.html
   My bibliography  Save this paper

Precautionary Saving, the Current Account, and the International Distribution of Wealth

Author

Listed:
  • Ken Beauchemin
  • Betty Daniel

Abstract

This paper studies the interaction between time preference heterogeneity and precautionary saving in generating both persistent current account imbalance and a stationary equilibrium distribution of wealth across countries. We use numerical techniques to present two sets of results. First, when differences in discount factors are permanent and income is stochastic, the relatively patient country runs a current account surplus in transition to a steady state equilibrium. The impatient agent's precautionary motive to save yields an equilibrium distribution of wealth with no mass on the borrowing constraint. Second, when the difference in discount factors is stochastic, but highly persistent, persistent current account imbalance becomes a feature of equilibrium. Again, the precautionary motive keeps the economy out of corners. Together, stochastic discount factors and the precautionary motive imply an international distribution of wealth roughly consistent with data.

Suggested Citation

  • Ken Beauchemin & Betty Daniel, 2000. "Precautionary Saving, the Current Account, and the International Distribution of Wealth," Discussion Papers 00-01, University at Albany, SUNY, Department of Economics.
  • Handle: RePEc:nya:albaec:00-01
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    current account; uncertainty; precautionary saving;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nya:albaec:00-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Byoung Park). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.