Resumen de Precautionary Savings and Wealth Distributionunder Habit Formation Preferences
Antonia Díaz, Josep Pijoan-Mas, José Victor Ríos Rull
We study the role of habit formation in shaping the amount of precautionary savings and the wealth distribution in heterogeneous agents model economies with idiosyncratic uncertainty. We adjust preferences to equate the Intertemporal Elasticity of Substitution in all model economies. We find that habit formation brings a hefty increase in precautionary savings and very mild reductions in the coefficient of variation and in the Gini index of wealth. These findings hold for both persistent and non persistent habits, with the effectsof the former being much larger.
