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The Implications of Lower Down Payments on Consumption Volatility

Farr, Christopher; Luengo-Prado, Maria J. - Society for Computational Economics - SCE - 2001

We examine the effects of decreasing down payment requirements on consumption volatility within a model which … consumption becomes more volatile as down payment requirements decrease. This finding is true for both individual and aggregate … consumption, and it is robust to the inclusion of adjustment costs. Transitional dynamics imply that a financial liberalization …

Persistent link: https://www.econbiz.de/10005345569

Measuring the Natural Rate of Interest

Laubach, Thomas; Williams, John C. - Society for Computational Economics - SCE - 2001

The natural rate of interest -- the real interest rate consistent with output equaling potential -- plays an important role in both economic forecasting and monetary policy. Much of the literature has assumed that the natural rate of interest is constant. For example, the Taylor rule includes a...

Persistent link: https://www.econbiz.de/10005132898

Cross-Sectional Aggregation of Nonlinear Dynamic Models and Aggregate Consumption Dynamics

Binder, Michael - Society for Computational Economics - SCE - 2001

examining whether some key properties of aggregate U.S. consumption data can be explained using a life-cycle model of … consumption under uncertainty where individual consumers display heterogeneous, non-time separable preferences and face …

Persistent link: https://www.econbiz.de/10005132861

Revolvers for Self-Control

Bertaut, Carol C.; Haliassos, Michael - Society for Computational Economics - SCE - 2001

The paper deals with a newly discovered credit card puzzle. Many US households revolve a balance on high-interest credit cards while holding low-interest liquid or total safe assets that could be used to repay this balance. Such behavior seems to ignore obvious arbitrage opportunities and to...

Persistent link: https://www.econbiz.de/10005132867

Bifurcation Routes and Economic Stability

Vosvrda, Miloslav S. - Society for Computational Economics - SCE - 2001

There are two basic tools to analyse fundamental issues in dynamical macroeconomics. One of them is a model of optimal growth describing savings behaviour. The second one is the Solow-Swan model with a constant aggregate propensity to save out of income. A steady state of the dynamical economic...

Persistent link: https://www.econbiz.de/10005132869

General Equilibrium Tax Policy with Hyperbolic Consumers

Petersen, Toke Ward - Society for Computational Economics - SCE - 2001

Recently David Laibson (1998) and others have argued in favor of using hyperbolic discount functions. The purpose of this paper is to investigate whether conventional wisdom, based on the standard model with exponential discounting, also holds in the case where consumers have hyperbolic discount...

Persistent link: https://www.econbiz.de/10005132874

Intergenerational Risk Sharing and Asset Returns

Konstantinov, Vassil A. - Society for Computational Economics - SCE - 2001

We investigate portfolio allocations and asset returns within a stochastic OLG economy with risky equity, generation-wide labor income shocks and portfolio nonnegativity constraints. Our model assumes a difference stationary endowment process, a young generation that faces labor income...

Persistent link: https://www.econbiz.de/10005537773

Portfolio Choice, Liquidity Constraints and Stock Market Mean Reversion

Michaelides, Alexander - Society for Computational Economics - SCE - 2001

This paper solves numerically for the optimal consumption and portfolio choice of an infinitely lived investor facing …

Persistent link: https://www.econbiz.de/10005537783

Fiscal Policy and Aggregate Uncertainty

Gokhale, Jagadeesh; Kotlikoff, Laurence J. - Society for Computational Economics - SCE - 2001

This paper develops and simulates a three-period life-cycle model with aggregate uncertainty. The model incudes a market in risk-free bonds. The paper studies how uncertainty in fiscal policy affects welfare, the equity premium, risk-sharing, and the caculation of generational accounts.

Persistent link: https://www.econbiz.de/10005345591

Monetary Instrument Problem Revisited: The Role of Fiscal Policy

Kim, Soyoung - Society for Computational Economics - SCE - 2001

The monetary instrument problem is examined in an endowment economy model with various stochastic disturbances, with minimizing the variance of inflation as the policy objective. Following current developments in the theory of fiscal determination of the price level, for different monetary...

Persistent link: https://www.econbiz.de/10005345606