IMF paper analyses savings and investment response to shocks

IMF headquarters in Washington DC

A working paper, published by the International Monetary Fund in May, examines the effect of permanent and temporary income shocks on precautionary savings and investment.

The authors, Reda Cherif and Fuad Hasanov, develop a "store or sow" model, finding that high volatility of permanent shocks leads to a high rate of saving and low investment in riskier assets, which the authors refer to as a "volatility trap". When the volatility of permanent shocks is low, however, saving is low and

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: