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Interpreting Life Cycle Inequality Patterns as an Efficient Allocation: Mission Impossible?
Badel, Alejandro; Huggett, Mark - In: Review of Economic Dynamics 17 (2014) 4, pp. 613-629
The life-cycle patterns of consumption, wage and hours inequality observed in U.S. cross-section data are commonly viewed as incompatible with a Pareto efficient allocation. We determine the extent to which these qualitative and quantitative patterns can or cannot be produced by Pareto efficient...
Persistent link: https://www.econbiz.de/10010945607
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On the Evolution of the US Consumer Wealth Distribution
Hintermaier, Thomas; Koeniger, Winfried - In: Review of Economic Dynamics 14 (2011) 2, pp. 317-338
. We find that considering a wide range of net worth percentiles for prime-age consumers between ages 26 and 55 delivers … net worth increases with age while the dispersion of net worth falls with age. The model also predicts some of the … dispersion of net worth for all prime-age consumers, while the model does not predict the observed increase of average net worth …
Persistent link: https://www.econbiz.de/10008670383
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Preferences for Risk in Dynamic Models with Adjustment Costs
Vereshchagina, Galina - In: Review of Economic Dynamics 17 (2014) 1, pp. 86-106
This paper characterizes the solution to a consumption/savings decision problem in which one of the consumption goods involves transaction costs. It then analyzes how such adjustment costs affect consumers' risk attitudes. Previous studies have suggested that transaction costs, by resulting in...
Persistent link: https://www.econbiz.de/10010729239
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Saving Rates and Portfolio Choice with Subsistence Consumption
Achury, Carolina; Hubar, Sylwia; Koulovatianos, Christos - In: Review of Economic Dynamics 15 (2012) 1, pp. 108-126
We analytically show that a common across rich/poor individuals Stone-Geary utility function with subsistence consumption in the context of a simple two-asset portfolio-choice model is capable of qualitatively and quantitatively explaining: (i) the higher saving rates of the rich, (ii) the...
Persistent link: https://www.econbiz.de/10008828681
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Bequest Motives and the Annuity Puzzle
Lockwood, Lee - In: Review of Economic Dynamics 15 (2012) 2, pp. 226-243
Few retirees annuitize any wealth, a fact that has so far defied explanation within the standard framework of forward-looking, expected utility-maximizing agents. Bequest motives seem a natural explanation. Yet the prevailing view is that people with plausible bequest motives should annuitize...
Persistent link: https://www.econbiz.de/10008861934
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Search for Financial Returns and Social Security Privatization
McKay, Alisdair - In: Review of Economic Dynamics 16 (2013) 2, pp. 253-270
I develop a general equilibrium model in which the quality of household financial decisions is endogenously determined by the incentives to exert effort in learning about financial opportunities. The model generates predictions for asset market participation and returns across households....
Persistent link: https://www.econbiz.de/10010604555
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The distribution of household debt in the United States, 1950-2022
Bartscher, Alina K.; Kuhn, Moritz; Schularick, Moritz; … - In: Review of Economic Dynamics 57 (2025), pp. 1-22
Using new household-level data, we study the secular increase in U.S. household debt and its distribution since 1950. Most of the debt were mortgages, which initially grew because more households borrowed. Yet after 1980, debt mostly grew because households borrowed more. We uncover home equity...
Persistent link: https://www.econbiz.de/10015407248
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On the Persistence of Income Shocks over the Life Cycle: Evidence, Theory, and Implications
Karahan, Fatih; Ozkan, Serdar - In: Review of Economic Dynamics 16 (2013) 3, pp. 452-476
idiosyncratic earnings shocks? This paper proposes a novel specification for residual earnings that allows for an age profile in the … workers. Persistence rises with age, up to unity, until midway through life. The variance of persistent shocks exhibits a U … specification in the literature (with age-invariant persistence and variance) cannot capture the earnings dynamics of young workers …
Persistent link: https://www.econbiz.de/10011133629
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Innovations in Information Technology and the Mortgage Market
Guler, Bulent - In: Review of Economic Dynamics
In this paper I analyze the effects of innovations in information technology on the mortgage and housing markets using a life-cycle model with incomplete markets and idiosyncratic income, as well as moving and house price shocks. I explicitly model the housing tenure choices of households....
Persistent link: https://www.econbiz.de/10011103247
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Complete Markets Strikes Back: Is the Reduced-form Measure of Consumption Insurance Reliable?
Sun, Gang - In: Review of Economic Dynamics
This paper highlights the identification problem of the reduced-form approach in quantifying the degree of consumption insurance as in Blundell et al. (2008, BPP thereafter). I argue that the reduced-form estimates are difficult to interpret in terms of the degree of consumption insurance. I...
Persistent link: https://www.econbiz.de/10011115652