Macroeconomic Experience and Precautionary Savings

Project Start:01/2018
Researchers:Baptiste Massenot, Giang Nghiem, Nathanael Vellekoop
Category: Macro Finance
Funded by:LOEWE

Topic and Objectives

Using a survey of Dutch households, we find that individuals who have experienced higher national unemployment rates over their lifetime save more and borrow less, after controlling for aggregate shocks, income, wealth, and demographics. These results are consistent with experience-based learning and inconsistent with rational learning. Furthermore, these individuals find it more important to save for retirement and are more worried about losing their job. These observations suggest that periods of high unemployment depress aggregate demand because of persistently more pessimistic beliefs.

Related Working Papers

No.Author/sTitleYearProgram AreaKeywords
257Baptiste Massenot, Giang NghiemDepressed Demand2019 Macro Finance