In this paper we show the quantitative importance of the process that determines changes in family composition to determine the main macroeconomic magnitudes. We do so by modelling family type as a stochastic process that affects households in a way similar to shocks to earnings. Agents respond...

We build an aggregate model with different size houses and liquid assets. Typical households are born, are subject to idiosyncratic earnings risk, and save for both life-cycle reasons and housing reasons. Typically, a subset of these households, after accumulating some assets, make a down...

Data on the life-cycle profiles of inequality in wages, earnings, hours worked, and consumption contain precious information for answering questions about the ability of households to insure labor market risk and about the sources of this risk. This paper demonstrates that the choice of whether...

We evaluate the asset pricing implications of a class of models in which risk sharing is imperfect because of limited enforcement of intertemporal contracts. Lustig (2004) has shown that in such a model the asset pricing kernel can be written as a simple function of the aggregate consumption...

Consumption models with endogenous debt constraints differ from standard incomplete markets models in their predictions about an individual household's ability to smooth consumption across time and states of the world. In this paper we develop these differences, both theoretically and...