Consumption Over The Life Cycle And Over The Business Cycle
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Consumption Over The Life Cycle And Over The Business Cycle
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Author : Orazio P. Attanasio
language : en
Publisher:
Release Date : 1993
Consumption Over The Life Cycle And Over The Business Cycle written by Orazio P. Attanasio and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Consumption (Economics) categories.
The main aim of this paper is to assess the validity of the life cycle model of consumption. In particular, we address an issue that has recently received much attention, especially in the macroeconomic literature: that of "excess sensitivity" of consumption growth to income growth. We do this using a time series of cross sections and a novel and flexible parameterization of preferences. The former allows us to' address aggregation issues directly, while with the latter we can allow both the discount factor and the elasticity of intertemporal substitution eis to be affected by various observable variables and lifetime wealth. The main findings can be summarized as follows: (i) the excess sensitivity of consumption growth to labor income disappears when we control for demographic variables. This is true both at life cycle and business cycle frequencies. (ii) estimation of a flexible specification of preferences indicates that the elasticity of intertemporal substitution is a function of several variables, including the level of consumption. The eis increases with the level of consumption, as expected. (iii) the variables that change the eis are also important in explaining why we observe excess sensitivity over the business cycle. (iv) we are able to reconcile our results with those reported both in the macro and micro literature. (v) in our specification the elasticity of intertemporal substitution is not very well determined. This result, however, should be taken with care, as we have not made an effort to construct a 'preferred' specification, which would probably include additional controls for labor supply behavior. The evidence presented shows that the life cycle model cannot be easily dismissed. Indeed, we believe that the model does a good job at representing consumption behavior both over the life cycle and over the business cycle.
Consumption Over The Life Cycle
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Author : Pierre-Olivier Gourinchas
language : en
Publisher:
Release Date : 1999
Consumption Over The Life Cycle written by Pierre-Olivier Gourinchas and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with Consumption (Economics) categories.
This paper employs a synthetic cohort technique and Consumer Expenditure Survey data to construct average age-profiles of consumption and income over the working lives of typical households across different education and occupation groups. Using these profiles, we estimate a structural model of optimal life-cycle consumption expenditures in the presence of realistic labor income uncertainty. The model fits the profiles quite well. In addition to providing tight estimates of the discount rate and risk aversion, we find that consumer behavior changes strikingly over the life-cycle. Young consumers behave as buffer-stock agents. Around age 40, the typical household starts accumulating liquid assets for retirement, and its behavior mimics more closely that of a certainty equivalent consumer. This change in behavior is mostly driven by the life-cycle profile of expected income. Our methodology provides a natural decomposition of saving into its precautionary and retirement components.
Credit Card Utilization And Consumption Over The Life Cycle And Business Cycle
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Author : Scott Fulford
language : en
Publisher:
Release Date : 2018
Credit Card Utilization And Consumption Over The Life Cycle And Business Cycle written by Scott Fulford and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
The revolving credit available to consumers changes substantially over the business cycle, the life cycle, and for individuals. We show that debt changes at the same time as credit, so credit utilization is remarkably stable. From ages 20-40, for example, credit card limits grow by more than 700 percent, and yet utilization holds steadily at around 50 percent. We estimate a structural model of life-cycle consumption and credit use in which credit cards can be used for payments, precautionary smoothing, and life-cycle smoothing, uniting their monetary and revolving credit functions. Our estimates predict stable utilization closely matching the individual, life-cycle, and business-cycle relationships between credit and debt. The preference heterogeneity implied by the different uses of credit cards drives our results. The revealed preference that some people with credit cards borrow at high interest, while others do not, suggests that around half the population is living nearly hand to mouth.
Income And Consumption Over The Business Cycle
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Author : Calogero Brancatelli
language : en
Publisher:
Release Date : 2022
Income And Consumption Over The Business Cycle written by Calogero Brancatelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with Business cycles categories.
This paper revisits the effects of income changes on consumption of private households by focusing on a commonly disregarded and yet sizeable component of household expenditures: consumption of food and non-food consumer packaged goods. We exploit a new data source from the Netherlands that combines on the level of individual households administrative data from tax records with household scanner data, thus minimizing measurement error for both expenditures and the key explanatory variable, household disposable income. Even after controlling for differences in needs and for consumption volume, we document significant variation in expenditures and thereby reveal substantial scope for potential savings. Still, even though the Netherlands experienced a recession and a subsequent recovery in the analysed period from 2011 to 2018, we find only an economically small relationship with income, which is also not higher for households with low income or low liquidity. Despite remaining small in magnitude, we document inter alia a much higher coefficient for single households. We can exclude various potentially confounding effects as we show that retailers practice national pricing and as we control for sample composition and potential substitution between in-house and out-of-house consumption.
Consumption Over The Life Cycle
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Author : Jesús Fernández-Villaverde
language : en
Publisher:
Release Date : 2002
Consumption Over The Life Cycle written by Jesús Fernández-Villaverde and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Consumer behavior categories.
This paper uses a seminonparametric model and Consumer Expenditure Survey data to estimate life cycle profiles of consumption, controlling for demographics, cohort and time e.ects. In addition to documenting profiles for total and nondurable consumption, we devote special attention to the age expenditure pattern for consumer durables. We find hump-shaped paths over the life cycle for total, for nondurable and for durable expenditures. Changes in household size account for roughly half of these humps. The other half remains unaccounted for by the standard complete markets life cycle model. Our results imply that households do not smooth consumption over their lifetimes. This is especially true for services from consumer durables. Bootstrap simulations suggest that our empirical estimates are tight and sensitivity analysis indicates that the computed profiles are robust to a large number of different specifications
The Economics Of Consumption
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Author : Tullio Jappelli
language : en
Publisher: Oxford University Press
Release Date : 2017-09-01
The Economics Of Consumption written by Tullio Jappelli and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-09-01 with Business & Economics categories.
Consumption decisions are crucial determinants of business cycles and growth. Knowledge of how consumers respond to the economic environment and how they react to the risks that they encounter during the life-cycle is therefore important for evaluating stabilization policies and the effectiveness of fiscal packages implemented in response to economic downturns or financial crises. In The Economics of Consumption, Tullio Jappelli and Luigi Pistaferri provide a comprehensive examination of the most important developments in the field of consumption decisions and evaluate economic models against empirical evidence. The first part of the book provides the basic ingredients of economic models of consumption decisions. The central part reviews the empirical literature on the effect of income and wealth changes on consumption and on the relevance of precautionary saving and credit market imperfections. The last chapters extend the basic framework to such important areas as bequests, leisure, lifetime uncertainty, and financial sophistication. Jappelli and Pistaferri shed light on important issues, including how consumption responds to changes in economic resources, how economic circumstances and consumers' characteristics influence behavior, and whether consumption inequality depends on income shocks and their persistence.
National Saving And Economic Performance
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Author : John B. Shoven
language : en
Publisher: University of Chicago Press
Release Date : 2009-02-15
National Saving And Economic Performance written by John B. Shoven and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-02-15 with Business & Economics categories.
The past decade has witnessed a decline in saving throughout the developed world—the United States has the dubious distinction of leading the way. The consequences can be serious. For individuals, their own economic security and that of their families is jeopardized. For society, inadequate rates of saving have been blamed for a variety of ills—decreasing the competitive abilities of American industry, slowing capital accumulation, increasing our trade deficit, and forcing the sale of capital stock to foreign investors at bargain prices. Restoring acceptable rates of saving in the United States poses a major challenge to those who formulate national economic policy, especially since economists and policymakers alike still understand little about what motivates people to save. In National Saving and Economic Performance, edited by B. Douglas Bernheim and John B. Shoven, that task is addressed by offering the results of new research, with recommendations for policies aimed to improve saving. Leading experts in diverse fields of economics debate the need for more accurate measurement of official saving data; examine how corporate decisions to retain or distribute earnings affect household-level consumption and saving; and investigate the effects of taxation on saving behavior, correlations between national saving and international investment over time, and the influence of economic growth on saving. Presenting the most comprehensive and up-to-date research on saving, this volume will benefit both academic and government economists.
Hysteresis And Business Cycles
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Author : Ms.Valerie Cerra
language : en
Publisher: International Monetary Fund
Release Date : 2020-05-29
Hysteresis And Business Cycles written by Ms.Valerie Cerra and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-05-29 with Business & Economics categories.
Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Readings In Business Cycle Theory
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Author : American Economic Association
language : en
Publisher:
Release Date : 1944
Readings In Business Cycle Theory written by American Economic Association and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1944 with Business cycles categories.
Billy White Hawk leaves his Idaho reservation in search of a better life in California, where instead he encounters hatred and hostility that are increasingly difficult to cope with.
Business Cycles And Equilibrium
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Author : Fischer Black
language : en
Publisher: John Wiley & Sons
Release Date : 2009-11-02
Business Cycles And Equilibrium written by Fischer Black and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-11-02 with Business & Economics categories.
An updated look at what Fischer Black's ideas on business cycles and equilibrium mean today Throughout his career, Fischer Black described a view of business fluctuations based on the idea that a well-developed economy will be continually in equilibrium. In the essays that constitute this book, which is one of only two books Black ever wrote, he explores this idea thoroughly and reaches some surprising conclusions. With the newfound popularity of quantitative finance and risk management, the work of Fischer Black has garnered much attention. Business Cycles and Equilibrium-with its theory that economic and financial markets are in a continual equilibrium-is one of his books that still rings true today, given the current economic crisis. This Updated Edition clearly presents Black's classic theory on business cycles and the concept of equilibrium, and contains a new introduction by the person who knows Black best: Perry Mehrling, author of Fischer Black and the Revolutionary Idea of Finance (Wiley). Mehrling goes inside Black's life to uncover what was occurring during the time Black wrote Business Cycles and Equilibrium, while also shedding light on what Black would make of today's financial and economic meltdown and how he would best advise to move forward. The essays within this book reach some interesting conclusions concerning the role of equilibrium in a developed economy Warns about the use and abuse of modeling Explains the risky business of risk in a straightforward and accessible style Contains chapters dedicated to "the effects of uncontrolled banking," "the trouble with econometric models," and "the effects of noise on investing" Includes commentary on Black's life and work at the time Business Cycles and Equilibrium was written as well as insight as to what Black would make of the current financial meltdown Engaging and informative, the Updated Edition of Business Cycles and Equilibrium will give you a better understanding of what is really going on during these uncertain and volatile financial times.