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Carroll, Chris

Overview
Works: 76 works in 333 publications in 1 language and 1,684 library holdings
Roles: Author, Editor
Classifications: HB1, 339.470287
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 72 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
Does cultural origin affect saving behavior? : evidence from immigrants by Chris Carroll( Book )
13 editions published in 1998 in English and held by 67 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
The nature of precautionary wealth by Chris Carroll( Book )
13 editions published in 1995 in English and held by 66 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
Death to the log-linearized consumption Euler equation! : (and very poor health to the second-order approximation) by Chris Carroll( Book )
13 editions published in 1997 in English and held by 63 libraries worldwide
Abstract: 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
Comparison utility in a growth model by Chris Carroll( Book )
12 editions published in 1997 in English and held by 61 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
Buffer-stock saving and the life cycle/permanent income hypothesis by Chris Carroll( Book )
12 editions published in 1996 in English and held by 61 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
Precautionary saving and the marginal propensity to consume out of permanent income by Chris Carroll( Book )
13 editions published between 2001 and 2009 in English and held by 61 libraries worldwide
The budget constraint requires that, eventually, consumption must adjust fully to any permanent shock to income. Intuition suggests that, knowing this, optimizing agents will fully adjust their spending immediately upon experiencing a permanent shock. However, this paper shows that if consumers are impatient and are subject to transitory as well as permanent shocks, the optimal marginal propensity to consume out of permanent shocks (the MPCP) is strictly less than 1, because buffer stock savers have a target wealth-to-permanent-income ratio; a positive shock to permanent income moves the ratio below its target, temporarily boosting saving. JEL-Classifications: D81, D91, E21
Why do the rich save so much? by Chris Carroll( Book )
12 editions published between 1997 and 1998 in English and held by 61 libraries worldwide
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
Unemployment expectations, jumping (S, s) triggers, and household balance sheets by Chris Carroll( Book )
13 editions published in 1997 in English and held by 60 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
Saving and growth : a reinterpretation by Chris Carroll( Book )
12 editions published in 1993 in English and held by 54 libraries worldwide
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
Portfolios of the rich by Chris Carroll( Book )
13 editions published in 2000 in English and held by 52 libraries worldwide
Abstract: Recent research has shown that rich' households save at much higher rates than others (see Carroll (2000); Dynan, Skinner, and Zeldes (1996); Gentry and Hubbard (1998); Huggett (1996); Quadrini (1999)). This paper documents another large difference between the rich and the rest of the population: portfolios of the rich are heavily skewed toward risky assets, particularly investments in their own privately held businesses. The paper explores three possible explanations of these facts. First, perhaps there is exogenous variation in risk tolerance, so that highly risk tolerant house-holds engage in high-risk, high-return activities, and the risk-lovers who are lucky constitute the rich. A second possibility is that capital market imperfections a la Gentry and Hubbard (1998)and Quadrini (1999) require entrepreneurial activities to be largely self-financed, and these same imperfections imply that entreprenurial investment will yield high average returns. The final possibility is that wealth enters households' utility functions directly as a luxury good as in Carroll (2000) (one interpretation is that this reflects the utility of anticipated bequests), implying that risk aversion declines as wealth rises. The paper concludes that the overall pattern of facts suggests both Carroll-style utility and Gentry/Hubbard-Quadrini style capital market imperfections are important
Theoretical foundation of buffer stock saving by Chris Carroll( Book )
12 editions published between 2004 and 2011 in English and held by 49 libraries worldwide
"Buffer-stock" models of saving are now standard in the consumption literature. This paper builds theoretical foundations for rigorous understanding of the main features of such models, including the existence of a target wealth ratio and the proposition that aggregate consumption growth equals aggregate income growth in a small open economy populated by buffer stock savers
A theory of the consumption function, with and without liquidity constraints (expanded version) by Chris Carroll( Book )
16 editions published in 2001 in English and held by 46 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
The epidemiology of macroeconomic expectations by Chris Carroll( Book )
13 editions published in 2001 in English and held by 44 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
Improving the measurement of consumer expenditures ( Book )
2 editions published in 2015 in English and held by 36 libraries worldwide
A tractable model of precautionary reserves, net foreign assets, or sovereign wealth funds by Chris Carroll( Computer File )
14 editions published in 2009 in English and held by 32 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. JEL-Classifications: C61
The method of endogenous gridpoints for solving dynamic stochastic optimization problems by Chris Carroll( Computer File )
10 editions published in 2005 in English and held by 27 libraries worldwide
This paper introduces a method for solving numerical dynamic stochastic optimization problems that avoids rootfinding operations. The idea is applicable to many microeconomic and macroeconomic problems, including life cycle, buffer-stock, and stochastic growth problems. Software is provided
How large is the housing wealth effect? : a new approach by Chris Carroll( Book )
8 editions published in 2006 in English and held by 20 libraries worldwide
This paper presents a simple new method for estimating the size of 'wealth effects' on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as 'habits' in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegration- based estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector
International evidence on sticky consumption growth by Chris Carroll( Book )
14 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 Campbell-Mankiw models work about equally well
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
 
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Associated Subjects
Alien property Anti-inflationary policies--Econometric models Capital movements Consumer behavior Consumer behavior--Econometric models Consumer behavior--Mathematical models Consumption (Economics) Consumption (Economics)--Econometric models Consumption (Economics)--Mathematical models Cost and standard of living Disposable income--Econometric models Econometric models Economic development Economic development--Econometric models Economic development--Mathematical models Economics Economic security--Econometric models Emigration and immigration--Economic aspects Emigration and immigration--Economic aspects--Econometric models Employment forecasting--Econometric models Equilibrium (Economics)--Econometric models Equilibrium (Economics)--Mathematical models Finance, Personal Financial security Friedman, Milton, Immigrants--Economic conditions Income maintenance programs--Econometric models Investments, Foreign Liquidity (Economics)--Econometric models Management Mathematical models Mathematical optimization Monetary policy--Econometric models Portfolio management Rational expectations (Economic theory) Rational expectations (Economic theory)--Econometric models Rational expectations (Economic theory)--Mathematical models Rich people Saving and investment Saving and investment--Econometric models Saving and investment--Mathematical models Sovereign wealth funds Stochastic analysis Terrorism--Social aspects Unemployment--Econometric models United States Wealth Wealth--Mathematical models
Alternative Names
Carroll, C. D.
Carroll, C. D. (Christopher D.)
Carroll, Christopher
Carroll, Christopher D.
Languages
English (231)
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