Abstract
There is a consensus among academics and policymakers that the excess savings built up by households during the past couple of years are specific to the pandemic. Based on data from the past half century for the US, this article shows that savings generally increase during recessions; the pandemic is different only by the magnitude of these savings, but not by their sign. Moreover, it suggests that these excess savings are rather compensatory than precautionary, as households save more to rebuild their lost wealth.
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The views expressed in this paper are those of the authors and do not necessarily represent the views of the IMF, its Executive Board or IMF management.
Liviu Voinea, International Monetary Fund, Washington, DC, USA.
Prakash Loungani, International Monetary Fund, Washington, DC, USA
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Open Access: This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (https://creativecommons.org/licenses/by/4.0/).
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