Saving and economic shocks in rural Pakistan

This paper adapts the recent methodology of Parson to study saving rates in rural Pakistan. Particular attention is paid to differences in marginal rates of financial and physical saving and how these vary across income groups and by direction of income shocks. Households exhibit more difficulty in smoothing consumption after successive shocks than with a single shock. The study also observes marginal rates of saving out of international remittances, and lump sum pensions. Unlike domestic remittances, international remittances appear to be treated much as transitory income shocks.