TY  - BOOK
AU  - Cherif,Reda
AU  - Hasanov,Fuad
TI  - The Volatility Trap: Precautionary Saving, Investment, and Aggregate Risk 
T2  - IMF Working Papers; Working Paper
SN  - 1475503865 :
SN  - 1018-5941
PY  - 2012///
CY  - Washington, D.C.
PB  - International Monetary Fund
KW  - Buffer-Stock
KW  - imf
KW  - Correlation
KW  - Economic Growth and Aggregate Productivity: General
KW  - Growth
KW  - Investment Rate
KW  - Nonlinear Relationship
KW  - Bahrain
KW  - Bulgaria
KW  - Cameroon
KW  - Dominican Republic
KW  - Romania
N2  - We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store-or-sow" model of growth. High volatility of permanent shocks results in high precautionary saving in the safe asset and low investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical evidence shows a nonlinear relationship between investment and saving and that investment is a hump-shaped function of the volatility of permanent shocks, as predicted by the model
UR  - http://elibrary.imf.org/view/IMF001/12832-9781475503869/12832-9781475503869/12832-9781475503869.xml
UR  - http://www.imfbookstore.org/IMFORG/9781475503869
ER  -