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Carroll, Chris

Overview
Works: 69 works in 266 publications in 1 language and 909 library holdings
Roles: Author
Classifications: HB1, 332.673015195
Publication Timeline
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Publications about Chris Carroll
Publications by Chris Carroll
Most widely held works by Chris Carroll
How important is precautionary saving? by Chris Carroll( Book )
12 editions published between 1993 and 1995 in English and held by 101 libraries worldwide
Abstract: We estimate the fraction of the wealth of a sample of PSID respondents that is held because some households face greater income uncertainty than others. We first derive an equation characterizing the theoretical relationship between wealth and uncertainty in a buffer-stock model of saving. Next, we estimate that equation using PSID data; we find strong evidence that households engage in precautionary saving. Finally, we simulate the wealth distribution that would prevail if all households had the same uncertainty as the lowest-uncertainty group. We find that between 39 and 46 percent of wealth in our sample is attributable to uncertainty differentials across groups
The nature of precautionary wealth by Chris Carroll( Book )
14 editions published in 1995 in English and held by 94 libraries worldwide
Abstract: This paper uses the Panel Study of Income Dynamics to provide some of the first direct evidence that wealth is systematically higher for consumers with greater income uncertainty. However, the apparent pattern of precautionary saving is not consistent with a standard parameterization of the life cycle model in which consumers are patient enough to begin saving for retirement early in life: wealth is estimated to be less sensitive to uncertainty in permanent income than implied by that model. Instead, our results suggest that over most of their working lifetime, consumers behave in accordance with the 'buffer-stock' models of saving described in Carroll (1992) or Deaton (1991), in which consumers hold wealth principally to insulate consumption against near term fluctuations in income
Unemployment expectations, jumping (S, s) triggers, and household balance sheets by Chris Carroll( Book )
13 editions published in 1997 in English and held by 81 libraries worldwide
Abstract: This paper examines the relationship between household balance sheets, consumer purchases, and expectations. We find few robust empirical relationships between balance sheet measures and spending, but we do find that unemployment expectations are robustly correlated with spending. We then construct a formal model of durables and nondurables consumption with an explicit role for unemployment and for household debt. We find that the model is capable of explaining several empirical regularities which are, at best, unexplained by standard models. Finally, we show that a loosening of liquidity constraints can produce a runup in debt similar to that experienced recently in the US, and that after such a liberalization consumer purchases show heightened sensitivity to labor income uncertainty, providing a potential rigorous interpretation of the widespread view that the buildup of debt in the 1980s may have played an important role in the weakness of consumption during and after the 1990 recession
Why do the rich save so much? by Chris Carroll( Book )
12 editions published between 1997 and 1998 in English and held by 81 libraries worldwide
Abstract: This paper considers several alternative explanations for the fact that households with higher levels of lifetime income ( the rich') have higher lifetime saving rates (Dynan, Skinner, and Zeldes (1996); Lillard and Karoly (1997)). The paper argues that the saving behavior of the richest households cannot be explained by models in which the only purpose of wealth accumulation is to finance future consumption, either their own or that of heirs. The paper concludes that the simplest model that explains the relevant facts is one in which either consumers regard the accumulation of wealth as an end in itself, or unspent wealth yields a flow of services (such as power or social status) which have the same practical effect on behavior as if wealth were intrinsically desirable
Saving and growth : a reinterpretation by Chris Carroll( Book )
12 editions published in 1993 in English and held by 77 libraries worldwide
Abstract: We examine the relationship between income growth and saving using both cross-country and household data. At the aggregate level, we find that growth Granger causes saving, but that saving does not Granger cause growth. Using household data, we find that households with predictably higher income growth save more than households with predictably low growth. We argue that standard Permanent Income models of consumption cannot explain these findings, but that a model of consumption with habit formation may. The positive effect of growth on saving implies that previous estimates of the effect of saving on growth may be overstated
A tractable model of precautionary reserves, net foreign assets, or sovereign wealth funds by Chris Carroll( file )
14 editions published in 2009 in English and held by 76 libraries worldwide
We model the motives for residents of a country to hold foreign assets, including the precautionary motive that has been omitted from much previous literature as intractable. Our model captures many of the principal insights from the existing specialized literature on the precautionary motive, deriving a convenient formula for the economy's target value of assets. The target is the level of assets that balances impatience, prudence, risk, intertemporal substitution, and the rate of return. We use the model to shed light on two topical questions: The "upstream'' flows of capital from developing countries to advanced countries, and the long-run impact of resorbing global financial imbalances
International evidence on sticky consumption growth by Chris Carroll( file )
12 editions published in 2008 in English and held by 50 libraries worldwide
We estimate the degree of 'stickiness' in aggregate consumption growth (sometimes interpreted as reflecting consumption habits) for thirteen advanced economies. We find that, after controlling for measurement error, consumption growth has a high degree of autocorrelation, with a stickiness parameter of about 0.7 on average across countries. The sticky-consumption-growth model outperforms the random walk model of Hall (1978), and typically fits the data better than the popular Campbell and Mankiw (1989) model. In several countries, the sticky-consumption-growth and Campbell-Mankiw models work about equally well
A theory of the consumption function, with and without liquidity constraints (expanded version) by Chris Carroll( file )
11 editions published in 2001 in English and held by 30 libraries worldwide
This paper argues that the modern stochastic consumption model, in which impatient consumers face uninsurable labor income risk, matches Milton Friedman's (1957) original description of the Permanent Income Hypothesis much better than the perfect foresight or certainty equivalent models did. The model can explain the high marginal propensity to consume, the high discount rate on future income, and the important role for precautionary behavior that were all part of Friedman's original framework. The paper also explains the relationship of these questions to the Euler equation literature, and argues that the effects of precautionary saving and liquidity constraints are often virtually indistinguishable
Death to the log-linearized consumption Euler equation! : (and very poor health to the second-order approximation) by Chris Carroll( Book )
9 editions published in 1997 in English and held by 19 libraries worldwide
This paper shows that standard empirical methods for estimating log-linearized" consumption Euler equations cannot successfully uncover structural parameters like the" coefficient of relative risk aversion from the dataset of simulated consumers behaving exactly" according to the standard model. Furthermore, consumption growth for the simulated consumers" is very highly statistically related to predictable income growth - and thus standard excess" sensitivity' tests would reject the hypothesis that consumers are behaving according to the" standard model. Results are not much better for the second-order approximation to the Euler" equation. The paper concludes that empirical estimation of consumption Euler equations should" not be abandoned, and discusses some alternative empirical strategies that are not subject to the" problems of Euler equation estimation
International evidence on sticky consumption growth ( Computer File )
4 editions published in 2008 in English and held by 18 libraries worldwide
We estimate the degree of "stickiness" in aggregate consumption growth (sometimes interpreted as reflecting consumption habits) for thirteen advanced economies. We find that, after controlling for measurement error, consumption growth has a high degree of autocorrelation, with a stickiness parameter of about 0.7 on average across countries. The sticky-consumption-growth model outperforms the random walk model of Hall (1978), and typically fits the data better than the popular Campbell and Mankiw (1989) model. In several countries, the sticky-consumption-growth and CampbellMankiw models work about equally well
Comparison utility in a growth model by Chris Carroll( Book )
9 editions published in 1997 in English and held by 17 libraries worldwide
This paper compares the dynamics of two general equilibrium models of endogenous growth in which agents have comparison utility.' In the inward-looking' economy, individuals care about how their consumption in the current period compares to their own consumption in the past (one way to describe this is habit-formation' in consumption). In the outward-looking' economy, individuals care about how their own level of consumption compares with others' consumption. Consider the effect of negative shock to capital. In an endogenous growth model with standard preferences, there will be no effect on the saving rate or the growth rate of output. In both of the models that we consider, however, saving and growth will temporarily fall in response to the shock. The initial decline in saving and growth will be larger in the inward-looking case. However, since agents in the outward-looking case do not take into account the externality effect of their consumption, higher growth in this case will lead to lower utility than in the inward-looking case
Saving and growth with habit formation by Chris Carroll( Book )
3 editions published in 1995 in English and held by 16 libraries worldwide
Does cultural origin affect saving behavior? : evidence from immigrants by Chris Carroll( Book )
9 editions published in 1998 in English and held by 16 libraries worldwide
Because efforts to explain international saving differentials using traditional economic variables have not been very successful (Bosworth, 1993), some economists have proposed that national saving differences reflect cultural differences. We attempt to test that hypothesis by using data from the US Census to examine whether immigrants to the US from high-saving countries tend to save more than immigrants from low-saving countries. While we do find highly statistically significant differences in immigrants' saving behavior by country of origin, those differences do not match up with the differences in national saving rates. In particular, immigrants from high-saving Asian countries do not save more than other immigrants
Precautionary saving and the marginal propensity to consume out of permanent income by Chris Carroll( Book )
9 editions published between 2001 and 2009 in English and held by 16 libraries worldwide
Because the budget constraint implies that consumption must eventually fully adjust to permanent shocks, intuition suggests that consumption-smoothers will have an immediate marginal propensity to consume of one out of permanent shocks. However, this paper shows that if consumers are impatient and experience both transitory and permanent income shocks, the immediate marginal propensity to consume out of permanent shocks is strictly less than one, because buffer-stock savers have a target wealth-to-permanent-income ratio; for a consumer starting at the target ratio, a positive shock to permanent income moves their actual wealth- to-permanent-income ratio below the target, temporarily boosting the saving rate
The method of endogenous gridpoints for solving dynamic stochastic optimization problems ( Computer File )
2 editions published in 2005 in English and held by 15 libraries worldwide
Precautionary saving and precautionary wealth ( Computer File )
2 editions published in 2006 in English and held by 15 libraries worldwide
Liquidity constraints and precautionary saving by Chris Carroll( Book )
9 editions published in 2001 in English and held by 15 libraries worldwide
Economists working with numerical solutions to the optimal consumption/saving problem under uncertainty have long known that there are quantitatively important interactions between liquidity constraints and precautionary saving behavior. This paper provides the analytical basis for those interactions. First, we explain why the introduction of a liquidity constraint increases the precautionary saving motive around levels of wealth where the constraint becomes binding. Second, we provide a rigorous basis for the oft-noted similarity between the effects of introducing uncertainty and introducing constraints, by showing that in both cases the effects spring from the concavity in the consumption function which either uncertainty or constraints can induce. We further show that consumption function concavity, once created, propagates back to consumption functions in prior periods. Finally, our most surprising result is that the introduction of additional constraints beyond the first one, or the introduction of additional risks beyond a first risk, can actually reduce the precautionary saving motive, because the new constraint or risk can hide' the effects of the preexisting constraints or risks
Buffer-stock saving and the life cycle/permanent income hypothesis by Chris Carroll( Book )
8 editions published in 1996 in English and held by 15 libraries worldwide
This paper argues that the typical household's saving is better described by a traditional version of the Life Cycle/Permanent Income Hypothesis (LC/PIH) model. Buffer-stock behavior emerges if consumers with important income uncertainty are sufficiently impatient. In the traditional model, consumption growth is determined solely by tastes; in contrast, buffer-stock consumers set average consumption growth equal to average labor income growth, regardless of tastes. The model can explain three empirical puzzles: the [1991]; the the 1930's; and the temporal stability of the household age/wealth profile despite the unpredictability of idiosyncratic wealth changes
The epidemiology of macroeconomic expectations by Chris Carroll( Computer File )
9 editions published in 2001 in English and held by 15 libraries worldwide
Since the foundational work of Keynes (1936), macroeconomists have emphasized the importance of agents' expectations in determining macroeconomic outcomes. Yet in recent decades macroeconomists have devoted almost no effort to modeling actual empirical expectations data, instead assuming all agents' expectations are 'rational.' This paper takes up the challenge of modeling empirical household expectations data, and shows that a simple, standard model from epidemiology does a remarkably good job of explaining the deviations of household inflation and unemployment expectations from the rational expectations' benchmark. Furthermore, a microfoundations or 'agent-based' version of the model may be able to explain, in a way that still permits aggregation, stark rejections of the pure rational expectations framework like Souleles's (2002) finding that members of different demographic groups have sharply different predictions for macroeconomic aggregates like the inflation rate
On the concavity of the consumption function by Chris Carroll( Book )
3 editions published in 1995 in English and held by 14 libraries worldwide
 
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Alternative Names
Carroll, C. D.
Carroll, C. D. (Christopher D.)
Carroll, Christopher
Carroll, Christopher D.
Languages
English (176)
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