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.

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This paper was revised on July 10, 2015

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19067

Published: Aizenman, Joshua & Noy, Ilan, 2015. "Saving and the long shadow of macroeconomic shocks," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 147-159. citation courtesy of

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