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Household Income Risk, Nominal Frictions, and Incomplete Markets

Lütticke, Ralph; Bayer, Christian; Pham, Lien; Tjaden, … - Verein für Socialpolitik - VfS - 2013

This paper examines the effects of changes in uncertainty of household income on the macroeconomy. Households face … constrained by the zero lower bound. Our results imply that household income uncertainty may be an important factor in explaining …

Persistent link: https://www.econbiz.de/10010986054

Fiscal Stimulus and the Extensive Margin

Winkler, Roland; Lewis, Vivien - Verein für Socialpolitik - VfS - 2013

Using VAR analysis on US data, we show that unanticipated fiscal expansions boost private consumption and business formation. Models with an extensive investment margin, i.e. endogenous firm and product entry, have difficulties explaining these two phenomena simultaneously. Considering different...

Persistent link: https://www.econbiz.de/10010957939

Bubbles and Crowding-in of Capital via a Savings Glut

Hillebrand, Marten; Kikuchi, Tomoo; Sakuragawa, Masaya - Verein für Socialpolitik - VfS - 2014

This paper uncovers a novel mechanism by which bubbles crowd in capital investment. If capital is initially depressed by a binding credit constraint, injecting a bubble triggers a savings glut. Higher returns in a new bubbly equilibrium attract additional investors who expand investment at the...

Persistent link: https://www.econbiz.de/10011163977

Happiness and the Persistence of Income Shocks

Jüßen, Falko; Bayer, Christian - Verein für Socialpolitik - VfS - 2013

We reassess the empirical effects of income and employment on self-reported well-being. Our analysis makes use of a two-step estimation procedure that allows applying instrumental variable regressions with ordinal observable data. As suggested by the theory of incomplete markets, we...

Persistent link: https://www.econbiz.de/10010986076

Should unemployment insurance be asset-tested?

Koehne, Sebastian; Kuhn, Moritz - Verein für Socialpolitik - VfS - 2012

Empirical studies show that job search behavior depends on the financial situation of the unemployed. Starting from this observation, we ask how unemployment insurance policy should take the individual financial situation into account. We use a quantitative model with a realistically calibrated...

Persistent link: https://www.econbiz.de/10010955182

The optimal Chapter 7 exemption level in a life-cycle model with asset portfolios

Mankart, Jochen - Verein für Socialpolitik - VfS - 2011

value of defaulting. This is consistent data on household assets. Under chapter 7 of the US bankruptcy law, consumers can … that almost no household is affected by medium to high exemption levels because those households who might default do not …

Persistent link: https://www.econbiz.de/10010957292

Inter-Temporal Savings, Current Account Dynamics and Asymmetric Shocks in a Heterogeneous European Monetary Union

Schnabl, Gunther; Zemanek, Holger - Verein für Socialpolitik - VfS - 2011

In the current debate on the reasons and implications of the Greek and Irish euro crisis, the intra-European current account imbalances have gained rising attention. Whereas Greece and Ireland struggle for austerity in private and public spending, Germany is urged to reduce its current account...

Persistent link: https://www.econbiz.de/10010957294

The Effect of Household Debt Deleveraging on Unemployment Evidence from Spanish Provinces

Watzka, Sebastian - Verein für Socialpolitik - VfS - 2013

unemployment increase in Spain can be traced back to the debt deleveraging needs of Spanish households. We use provincial household … debt and sectoral unemployment data and follow Mian and Sufi (2012) to isolate the effect of household debt on Spanish … unemployment. We find that the level of household sector debt in Spanish provinces in 2007 is a highly significant determinant of …

Persistent link: https://www.econbiz.de/10010958024

Optimal capital taxation for time-nonseparable preferences

Koehne, Sebastian; Kuhn, Moritz - Verein für Socialpolitik - VfS - 2013

We study optimal capital taxation in a dynamic Mirrleesian model with time-nonseparable preferences. The model covers the widely used cases of habit formation and durable consumption. Time-nonseparable preferences change labor supply incentives across time and thereby generate novel motives to...

Persistent link: https://www.econbiz.de/10010958139

Risk of Rare Disasters, Euler Equation Errors and the Performance of the C-CAPM

Posch, Olaf; Schrimpf, Andreas - Verein für Socialpolitik - VfS - 2013

This paper shows that the consumption-based asset pricing model (C-CAPM) with low-probability disaster risk rationalizes large pricing errors, i.e., Euler equation errors. This result is remarkable, since Lettau and Ludvigson (2009) show that leading asset pricing models cannot explain sizeable...

Persistent link: https://www.econbiz.de/10010958146