⁶Our final modeling assumption is that we can capture most of the variation in the saving rate by considering the behavior of an economy populated by a single ‘employed’ agent (who is always afraid of becoming unemployed but never does). (Carroll and Jeanne (2009) show that the simulated behavior of an economy populated by a continuum of agents who draw unemployment shocks as specified in the model – so that at any given time there is a population of employed and of unemployed consumers – is very well represented by the behavior of the ‘representative employed consumer’ we use here).