Estimating the elasticity of intertemporal substitution taking into account the precautionary savings motive

Gomes, Fábio Augusto Reis; Ribeiro, Priscila Fernandes

doi:10.1016/j.jmacro.2015.04.001

Cited by 9 publications

(7 citation statements)

References 56 publications

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“…Rapid financial development in the developing countries (Arestis and Demetriades 1997;Jalilian and Kirkpatrick 2002;Singh 1997) has raised the importance of savings both individual and macroeconomic levels (Demirguc-Kunt et al 2015; Gomes and Ribeiro 2015;Karimli and Ssewamala 2015;Leff and Sato 1975;Prina 2015;Ram 1982;Rüfe-nacht et al 2015;Van Auken and Horton 2015). However, the coverage of formal banking in the Least Developed Countries (LDCs) is still low.…”

Section: Introductionmentioning

confidence: 99%

Microfinance and savings among the poor: evidence from Bangladesh microfinance sector

2016

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Despite rapid financial development, the coverage of the formal banking sector and population holding deposit accounts in Bangladesh (53.7 %) is still below the global average (62 %). As a consequence, Micro Finance Institutions (MFIs) have started providing financial services to these large section of people who have little access to finance otherwise. This paper examines empirically the impact of MFIs on the savings of poor in Bangladesh using the data from Microcredit Regulatory Authority database. The sample comprises 719 MFIs with data over the period, 2007-2012. The results show that MFI numbers and number of branches are positively associated with saving in the sector, which supports the institutional savings theory that posits that availability of financial institutions shapes saving behavior of people. Also, number of employees and number of borrowers positively affect saving. These findings from a large database contributes to the literature on the impact MFIs on savings behavior.

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Section: Introductionmentioning

confidence: 99%

Microfinance and savings among the poor: evidence from Bangladesh microfinance sector

2016

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“…The magnitude of σ is a debated issue in the literature. Empirical research on either micro-oriented country-level heterogeneity [Havranek et al (2015)] or aggregate consumption [Hall (1988)] generally found values of σ smaller than 1, though other analyses based either on micro data [e.g., Browning et al (1999)] or on macro data when accounting for precautionary savings [Gomes and Ribeiro (2015)] obtained the opposite result. We pinpoint, however, that σ was not estimated in models with endogenous demographics, with the exception of Jones and Schoonbroodt (2010).…”

Section: The Modelmentioning

confidence: 99%

“…In fact, when σ = 1 the expression in (8) boils down to U t = ln(c t ) + β t ln(d t+1 ) + γ ln(n t ) implying that d t+1 should be larger than 1 both transiently and in the long term, otherwise an increase in the length of life would reduce utility. In order to overcome this drawback, in the numerical experiments we will take σ larger than 1 in line with Gomes and Ribeiro (2015) and Pestieau and Ponthière (2017). Some clarifications on this issue are now useful.…”

Section: The Modelmentioning

confidence: 99%

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A Parsimonious Model of Longevity, Fertility, Hiv Transmission and Development

2019

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A central policy issue in the battle against HIV in sub-Saharan Africa (SSA) is whether and when high-prevalence countries might become autonomous in designing and implementing their own intervention policies against the disease. The aim of this research is twofold. First, it develops a framework for explaining economic development in a general equilibrium growth model with endogenous fertility and endogenous mortality forced by the threat of a persistent, deadly infectious disease, such as HIV/AIDS in SSA. Second, it aims to shed light on the interplay between foreign aid and endogenous domestic public policies in SSA countries severely afflicted by HIV. Consequently, it investigates the demographic and macroeconomic implications of an intervention against HIV/AIDS whose total amount is the sum of an exogenous component representing foreign aid and an endogenous public expenditure. On the assumption that these policies allow the same degree of HIV control, we show the emergence of quite different responses in terms of key demo-economic variables. These effects mainly pass through the fertility response to the evolving epidemic conditions.

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“…, equation 6is equal to expression (5). However, as pointed out by Gomes & Ribeiro (2015), the Epstein and Zin's preferences employ at least two assets, and one of them is the representative consumer optimal portfolio. It seems therefore more appropriate to use the recursive rather than the traditional power utility framework.…”

Section: Datamentioning

confidence: 99%

Estimating the elasticity of intertemporal substitution with leverage

González‐Urteaga

Rubio

2017

The North American Journal of Economics and Finance

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Following the recent literature on intermediary asset pricing models, this paper argues that the marginal utility of wealth of financial intermediaries can be used to generate enough volatility and counter-cyclicality on the recursive preference-based stochastic discount factor. Hence, a dynamic econometric strategy of an asset pricing model with the market portfolio return and the leverage growth of financial intermediaries allows for a sensible economic estimate of the elasticity of intertemporal substitution. On the contrary, the same framework with alternative measures of consumption produces extremely poor economic results.

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Estimating the elasticity of intertemporal substitution taking into account the precautionary savings motive

Cited by 9 publications

References 56 publications

Microfinance and savings among the poor: evidence from Bangladesh microfinance sector

Microfinance and savings among the poor: evidence from Bangladesh microfinance sector

A Parsimonious Model of Longevity, Fertility, Hiv Transmission and Development

Estimating the elasticity of intertemporal substitution with leverage

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