choices over the life cycle. We start by analyzing the theoretical impact of income changes on consumption - highlighting the … contributions, distinguishing between papers that use only income data and those that use both income and consumption data. The … and identify the income process or the information set of the individuals. Second, one can assume that the income process …

heterogeneity. In contrast to simpler models that attribute all income fluctuations to shocks, our framework disentangles …

decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each … intergenerational structure of the Panel Study of Income Dynamics. We find that over 60% of shocks to household income are potentially …