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Intertemporal Substitution in Consumption

Hall, Robert E. - 2021

Does a higher real interest rate induce significant postponement of consumption? According to the theory developed here, this question can be answered by studying the relation between the rate of growth of consumption and expected real interest rates. In postwar data for the United States,...

Persistent link: https://www.econbiz.de/10013222936

Precautionary Saving and Consumption Smoothing Across Time and Possibilities

Kimball, Miles S.; Weil, Philippe - 2021

This paper examines how aversion to risk and aversion to intertemporal substitution determine the strength of the precautionary saving motive in a two-period model with Selden/Kreps-Porteus preferences. For small risks, we derive a measure of the strength of the precautionary saving motive which...

Persistent link: https://www.econbiz.de/10013228024

Dynamic Consumption and Portfolio Choice with Stochastic Volatility in Incomplete Markets

Chacko, George - 2010

This paper analyzes optimal portfolio choice and consumption with stochastic volatility in incomplete markets. Using the Duffie-Epstein (1992) formulation of recursive utility in continuous time, it shows that the optimal portfolio demand for stocks under stochastic volatility varies strongly...

Persistent link: https://www.econbiz.de/10012763770

Intertemporal Substitution in Macroeconomics

Mankiw, Nicholas Gregory - 2011

time but not necessarily additively separable in consumption and leisure. We estimate three first order conditions which …, present leisure for future leisure and present consumption for present leisure. Our results show that the aggregate U.S. data … imply that either consumption or leisure is an inferior good …

Persistent link: https://www.econbiz.de/10013132070

Taxes and Time Allocation : Evidence from Single Women and Men

Gelber, Alexander M.; Mitchell, Joshua - 2011

Hundreds of papers have investigated how incentives and policies affect hours worked in the market. This paper examines how income taxes affect time allocation in the other two-thirds of the day. Using the Panel Study of Income Dynamics from 1975 to 2004, we analyze the response of single...

Persistent link: https://www.econbiz.de/10014045896

Crude by Rail, Option Value, and Pipeline Investment

Covert, Thomas R. - 2017

The U.S. shale boom has profoundly increased crude oil movements by both pipelines–the traditional mode of transportation–and railroads. This paper develops a model of how pipeline investment and railroad use are determined in equilibrium, emphasizing how railroads' flexibility allows them...

Persistent link: https://www.econbiz.de/10012947019

Estimating the Elasticity of Intertemporal Substitution Using Mortgage Notches

Best, Michael - 2018

Using a novel source of quasi-experimental variation in interest rates, we develop a new approach to estimating the Elasticity of Intertemporal Substitution (EIS). In the UK, the mortgage interest rate features discrete jumps – notches – at thresholds for the loan-to-value (LTV) ratio. These...

Persistent link: https://www.econbiz.de/10012911715

The Microeconomic Foundations of Aggregate Production Functions

Baqaee, David - 2018

Aggregate production functions are reduced-form relationships that emerge endogenously from input-output interactions between heterogeneous producers and factors in general equilibrium. We provide a general methodology for analyzing such aggregate production functions by deriving their first-...

Persistent link: https://www.econbiz.de/10012907445

Overcoming Wealth Inequality by Capital Taxes that Finance Public Investment

Mattauch, Linus - 2018

Wealth inequality is rising in rich countries. Capital taxation used simply to finance redistribution may not be able to counteract this trend, but can increased public investment financed by higher capital taxes? We examine how such a policy affects the distribution of wealth in a setting with...

Persistent link: https://www.econbiz.de/10012909868

A Ces Indirect Production Function

Jovanovic, Boyan - 2021

This paper derives an indirect production function that is, in a special case, of a constant elasticity of substitution form. This is not a contribution to the theory of aggregation generally. Instead it is a microfoundation for a specific but popular production function -- the CES -- that helps...

Persistent link: https://www.econbiz.de/10013220428