We argue that the U.S. personal saving rate’s long stability (from the 1960s through the early 1980s), subsequent steady decline (1980s - 2007), and recent substantial increase (2008 - 2011) can all be interpreted using a parsimonious ‘buffer stock’ model of optimal consumption in the presence of labor income uncertainty and credit constraints. Saving in the model is affected by the gap between ‘target’ and actual wealth, with the target wealth determined by credit conditions and uncertainty. An estimated structural version of the model suggests that increased credit availability accounts for most of the saving rate’s long-term decline, while fluctuations in net wealth and uncertainty capture the bulk of the business-cycle variation.
We show that an estimated tractable ‘buffer stock saving’ model can match the 30-year decline in the U.S. saving rate leading up to 2007, the sharp increase during the Great Recession, and much of the intervening business cycle variation. In the model, saving depends on the gap between ‘target’ and actual wealth, with the target determined by measured credit availability and measured unemployment expectations. Following financial deregulation starting in the late 1970s, expanding credit supply explains the trend decline in saving, while fluctuations in wealth and consumer-survey-measured unemployment expectations capture much of the business-cycle variation, including the sharp rise during the Great Recession.
We show that an estimated tractable 'buffer stock saving' model can match the 30-year decline in the U.S. saving rate leading up to 2007, the sharp increase during the Great Recession, and much of the intervening business cycle variation. In the model, saving depends on the gap between 'target' and actual wealth, with the target determined by measured credit availability and measured unemployment expectations. Following financial deregulation starting in the late 1970s, expanding credit supply explains the trend decline in saving, while fluctuations in wealth and consumer-survey-measured unemployment expectations capture much of the business-cycle variation, including the sharp rise during the Great Recession.
We show that an estimated tractable 'buffer stock saving' model can match the 30-year decline in the U.S. saving rate leading up to 2007, the sharp increase during the Great Recession, and much of the intervening business cycle variation. In the model, saving depends on the gap between 'target' and actual wealth, with the target determined by measured credit availability and measured unemployment expectations. Following financial deregulation starting in the late 1970s, expanding credit supply explains the trend decline in saving, while fluctuations in wealth and consumer-survey-measured unemployment expectations capture much of the business-cycle variation, including the sharp rise during the Great Recession.
This book, produced in two volumes, takes an integrative approach to the study of macroeconomics. In that respect, the book brings the different strands of macroeconomics together into a single approach under which economic agents strive to make rational choices but, while doing so, sometimes misconstrue the data available to them. The result is imbalances between aggregate supply and aggregate demand that can cause economic contractions. These imbalances may be self-correcting, or they may become long-lived and require government intervention through the exercise of corrective monetary and fiscal policy. Volume I examines economic behavior on the assumption that economic agents correctly interpret the data before them. It thus takes a “micro foundations” approach, under which aggregate supply equals aggregate demand. Volume II allows for the possibility of myopia on the part of economic agents and for the resulting economic malperformance that can result from this myopia. It examines the short-run disparities between aggregate supply and aggregate demand that can result from ill-informed choices of individual economic agents or from a misdiagnosis of economic data by policy makers. It concludes with a review of recent U.S. economic policy. The book aims to correct a good number of misconceptions that bedevil economic policymaking—among them the idea that protracted economic contractions necessarily call for increased government spending and lower taxes. It challenges the common understanding that government deficits raise interest rates and “crowd out” private investment.
This book is open access under a CC BY 4.0 license. This timely book addresses the conflict between globalism and nationalism. It provides a liberal communitarian response to the rise of populism occurring in many democracies. The book highlights the role of communities next to that of the state and the market. It spells out the policy implications of liberal communitarianism for privacy, freedom of the press, and much else. In a persuasive argument that speaks to politics today from Europe to the United States to Australia, the author offers a compelling vision of hope. Above all, the book offers a framework for dealing with moral challenges people face as they seek happiness but also to live up to their responsibilities to others and the common good. At a time when even our most basic values are up for question in policy debates riddled with populist manipulation, Amitai Etzioni’s bold book creates a new frame which introduces morals and values back into applied policy questions. These questions span the challenges of jobless growth to the unanswered questions posed by the role of artificial intelligence in a wide range of daily life tasks and decisions. While not all readers will agree with the communitarian solutions that he proposes, many will welcome an approach that is, at its core, inclusive and accepting of the increasingly global nature of all societies at the same time. It is a must read for all readers concerned about the future of Western liberal democracy. Carol Graham, Leo Pasvolsky Senior Fellow, The Brookings Institution and College Park Professor/University of Maryland In characteristically lively, engaging, and provocative style Etzioni tackles many of the great public policy dilemmas that afflict us today. Arguing that we are trapped into a spiral of slavish consumerism, he proposes a form of liberal communitarian that, he suggests, will allow human beings to flourish in changing circumstances. Jonathan Wolff, Blavatnik Chair of Public Policy, Blavatnik School of Government, University of Oxford
Despite some global risks, external conditions for Latin America should remain stimulative. With monetary policy in advanced economies expected to stay accommodative, external financing conditions will remain favorable. Strong demand from emerging Asian economies and the gradual recovery of advanced economies will continue to support commodity prices, benefiting exporters. The main policy challenge for most of the region is to take advantage of current conditions to continue buttressing a foundation for sustained growth. Other issues important to the region include: (i) strengthening balance sheets; (ii) understanding how changes in external conditions could impact public and external debt dynamics; and (iii) making the best use of the windfall from the recent terms-of-trade boom.
Dynamic Soaring Dissected Albatrosses fly over the oceans in swooping, curving flight gliding thousands of kilometres in search of food, mostly without flapping their wings. This is known as dynamic soaring, which is the use of the energy of the horizontal wind to sustain speed and height. It is different from the soaring flight of most other birds and gliders which use the vertical motion of the air to maintain or gain height. Since the 1880's, a time before manned gliding flight had been achieved, the mechanism of dynamic soaring has been poorly explained by the Rayleigh cycle or the wind gradient theory. However, there is more to dynamic soaring than the wind gradient and furthermore, the true nature of albatross flight has only recently been revealed by filming and GPS tracking. Dynamic Soaring Dissected takes up the discussion where it was left in the 19th century and explains how aircraft and birds fly. It looks at albatross flight through the lens of electronic tracking and takes us on a foraging trip with an albatross in long-distance soaring flight. In the Windward Turn Theory, it describes the mechanism of dynamic soaring and the hidden effect of the wind on a bird or an aircraft in flight. It explains the way that albatrosses are able to turn this effect to their advantage and how they are able to dynamic soar crosswind, upwind and downwind. It also describes how radio-control gliders can achieve huge speeds in circling flight and settles the perennial debate on the Myth of the Downwind Turn and what really happens when an aircraft turns downwind and ends up in a stall and spin accident.
