Saving and the Long Shadow of Macroeconomic Shocks

Joshua Aizenman, Ilan Noy

NBER Working Paper No. 19067
Issued in May 2013
NBER Program(s):   EFG   IFM

The global crisis of 2008 raises many questions regarding the long‐term response to crises. We know that households that lost access to credit, for example, were forced to adjust and increase saving. But, will households keep on saving more than they would have done otherwise had the global financial crisis not occurred? And for how long will this increased saving persist? Here, we study the degree to which past adverse income shocks increase the saving rates of affected households. We find evidence consistent with history‐dependent dynamics: more experience of past crises tends to increase household saving. We follow up with an investigation of the importance of historical exposure for current account dynamics, but find no strong indication that our measure of past exposure is important to the current account’s determination. We conclude by estimating the likely impact of the 2008 GFC on future saving.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


This paper was revised on July 10, 2015

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19067

Users who downloaded this paper also downloaded these:
Bruno and Shin w19084 Assessing Macroprudential Policies: Case of Korea
Christopoulou and Lillard w19036 Is Smoking Behavior Culturally Determined? Evidence from British Immigrants
Aizenman and Noy w18527 Macroeconomic Adjustment and the History of Crises in Open Economies
Spolaore w19122 What is European Integration Really About? A Political Guide for Economists
Heckman and Raut w19077 Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us