News: Seminari

Seminario di Alessandro Martinello

31.10.2017

Long-Run Saving Dynamics: Evidence from Unexpected Inheritances
with Jeppe Druedahl

Seminario di Alessandro Martinello, Lund University

We exploit inheritance episodes to provide novel causal evidence on long-run saving dynamics. For identification, we combine a panel of administrative wealth reports with the unexpected timing of sudden parental deaths. After inheritance, net worth converges towards the path established before parental death, and convergence is faster for liquid assets. Using a generalized structural framework, we show that buffer-stock and two-asset models can fit these dynamics, but only if agents are impatient enough and have both strong precautionary  and post-retirement saving motives. Relative to standard calibrations, such agents have at least 50 percent higher precautionary savings for given total wealth.