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Does Consumption Respond More to Housing Wealth Than to Financial Market Wealth?

Kishor, N. Kundan - Econometric Society - 2004

a debate about the role of housing wealth as one of the determinants of consumption. The literature is divided over the … issue whether the effect of change in the financial wealth on consumption is lower than the change in housing wealth. In … this paper using Gonzalo-Ng (2001) variance decomposition framework we have shown that the net effect of housing wealth …

Persistent link: https://www.econbiz.de/10005702625

Mortgages as Recursive Contracts

Marquis, Milton H.; Krainer, John - Econometric Society - 2004

Mortgages are one-sided contracts under which the borrower may terminate the contract at any time, while the lender must commit to honoring the terms of the contract throughout its life. There are two aspects to this feature of the contract that are modeled in this paper. The first is that the...

Persistent link: https://www.econbiz.de/10005328972

The Strength and Nature of Bequest Motives in the United States

Lee, Yoon G.; Horioka, Charles Yuji - Econometric Society - 2004

In this paper, we analyze the strength and nature of bequest motives in the United States using data from the 2000 Health and Retirement Study (HRS). The results of our analysis suggest that bequest motives are very strong in the United States and that they are altruistically motivated. This...

Persistent link: https://www.econbiz.de/10005342297

Consumer Time Inconsistency: Evidence from a market experiment in the credit card market

Shui, Haiyan; Ausubel, Lawrence M. - Econometric Society - 2004

This paper analyzes a unique dataset, which contains results of a large-scale experiment in the credit card market. Two strange phenomena that suggest time inconsistency in consumer behavior are observed: First, consumers prefer an introductory offer which has a lower interest rate with a...

Persistent link: https://www.econbiz.de/10005063723

Precautionary Saving, Borrowing Constraints, and Fiscal Policy

Park, Cheolbeom; Bishop, Thomas - Econometric Society - 2004

Recent empirical studies suggest that the average marginal propensity to consume (MPC) has declined. This paper explains the declining trend of the MPC with a standard representative consumer model where borrowing constraints become more relaxed as suggested by data. With an increase in...

Persistent link: https://www.econbiz.de/10005063766

Credit Crunches and Household Welfare: The Case of Korean Financial Crisis

Sawada, Yasuyuki; Kang, Sung Jin - Econometric Society - 2004

The financial crisis in 1997 caused serious deterioration of the Korean economy. We examined the credit crunch in Korea and how it affected household welfare. With household panel data from 1996-1998, we estimated a switching regression model of a consumption Euler equation, which is augmented...

Persistent link: https://www.econbiz.de/10005702753

A Life-cycle Model with Housing, Portfolio Allocation, and Mortgage Financing

Nichols, Joseph - Econometric Society - 2004

. First, housing is explicitly modeled as both a consumption and investment good, as opposed to examining just one aspect in … Retirement Survey. As a result, the model proves that the “over-investment” of housing is not inconsistent with the behavior of … rational, forward-looking agents. The model is also able to capture the negative correlation between the housing share and …

Persistent link: https://www.econbiz.de/10005328942

Unemployment Dynamics and Social Security

Rojas, Juan; Rendon, Silvio - Econometric Society - 2004

The goal of this paper is to determine the effects of different social security regimes on job search. A less generous pension system induces higher savings across the life cycle and makes agents wealthier and thus more reluctant to accept low wage offers. On the other hand, as the social...

Persistent link: https://www.econbiz.de/10005328864

Obsolescence of Durable Goods and Optimal Consumption

Stolyarov, Dmitriy; Stacchetti, Ennio - Econometric Society - 2004

We study a model with a durable good subject to abrupt, periodic obsolescence, and characterize the optimal purchasing policy. Consumers optimally synchronize new purchases with the arrival of new durable models. Hence, some agents use a "flexible" optimal replacement rule that switches between...

Persistent link: https://www.econbiz.de/10005328887

Tax Policy Under Keeping Up with the Joneses and Imperfectly Competitive Product Markets

Guo, Jang-Ting - Econometric Society - 2004

This paper examines the optimal (first-best) fiscal policy in a stochastic representative agent model that exhibits a ``keeping up with the Joneses'' utility function and imperfectly competitive product markets. We find that the optimal labor tax is a constant, whose sign is determined by the...

Persistent link: https://www.econbiz.de/10005329006