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We investigate the importance of aggregate and consumer-specific or idiosyncratic labour income risk for aggregate consumption changes in the US over the period 1952-2001. Theoretically, the effect of labour income risk on consumption changes is decomposed into an aggregate and into an...
Persistent link: https://www.econbiz.de/10011372981
calculated from the estimation of a log-linear version of the household intertemporal budget constraint as a cointegrating …
Persistent link: https://www.econbiz.de/10011844588
Recessions and expansions are often caused or reinforced by developments in private consumption - the largest component of aggregate demand - which, as a result, varies over the business cycle. As such, an accurate measurement of the cyclical component of consumption and an understanding of its...
Persistent link: https://www.econbiz.de/10014380708
incomplete markets model and find that advance information reduces households' income forecast errors by 15%. Our estimation …
Persistent link: https://www.econbiz.de/10013186823
When the financial positions of pension funds worsen, regulations prescribe that pension funds reduce the gap between their assets (invested contributions) and their liabilities (accumulated pension promises). This paper quantifies the business cycle effects and distributional implications of...
Persistent link: https://www.econbiz.de/10011869913
Persistent link: https://www.econbiz.de/10009720736
equation which encompasses many recent developments in consumption theory: habit formation, intertemporal substitution effects … simulations. The estimation results support the labour-consumption complementarity hypothesis but not the other forms of …
Persistent link: https://www.econbiz.de/10011380726
In this paper, we document that households' consumption expenditures depend on their expected earnings - even after controlling for realized earnings and wealth. To explain this evidence, we develop and structurally estimate a standard-incomplete markets model in which rational households...
Persistent link: https://www.econbiz.de/10013332707
variables, we use instrumental variables estimation. We exploit both the temporal and spatial dimensions of the panel by …
Persistent link: https://www.econbiz.de/10013279905
In this paper, we document that households' consumption expenditures crucially depend on their expected earnings - even after controlling for realized earnings, wealth and time-invariant unobserved characteristics such as permanent income and over-confidence. To explain this evidence, we develop...
Persistent link: https://www.econbiz.de/10014249642