Nor was there wanting still another
precautionary motive more related to Ahab personally.
This paper argues that currency substitution refers to a country's residents for the transaction motive,
precautionary motive, portfolio motive (i.
The
precautionary motive requires highly liquid savings in developing economies, where insurance for precautionary purposes seems to be less developed (Carrin 2002).
Macro uncertainty, as well as features shaping the
precautionary motive, should be a major factor to consider when discussing the causes, the sustainability and desirability of observed global imbalances," the authors conclude.
It is focused on the
precautionary motive for holding reserves, and has two aims: (i) to explore the role reserves play in preventing and mitigating crises; and (ii) to consider in what ways analysis on reserve adequacy may need to be augmented to account for country-specific factors.
Kaynes [5] suggests that there are three incentives for reserve cash holdings including transaction motive,
precautionary motive and speculative motive.
This result confirms the strength of the
precautionary motive in the economy well beyond the usual precautionary saving motive.
Secondly, maintaining liquid reserves by the firms may express their
precautionary motive (Diamond et al.
For example, the expansion of China's government into health care and pensions will be a pertinent move to reduce households'
precautionary motive for saving.
Fourthly, during slowdown a dominance of
precautionary motive may induce consumer to either defer their spending decisions or shift to unbranded alternatives.
These policies included, strengthening domestic consumption requires policies which transfer more corporate savings to households, as well as policies which reduce the
precautionary motive for savings among households.
