Modern consumer theories are built upon the premise of the forward looking behavior of households. While most of the empirical studies at micro level are based on Euler equation, there have been few to estimate the household consumption function and test the implication of forward looking...

In this paper we consider three alternative approaches to test the Permanent Income Hypothesis (PIH) in the context of dynamic panels: the aggregate consumption approach, the Euler equation approach and Þnally Friedman (1957)'s original characteristic tests. Our empirical evidence, using the...

According to the German SAVE survey, more than 40 percent of households regularly save fixed amounts rather than flexibly adjusting savings to income variations as assumed by the Permanent Income Hypothesis (PIH). Fixed amount saving behaviour could thus imply a challenge to PIH-based standard...

Was the increase in income inequality in the US due to permanent shocks or merely to an increase in the variance of transitory shocks? The implications for consumption and welfare depend crucially on the answer to this question. We use CEX repeated cross-section data on consumption and income to...

The revolving credit available to consumers changes substantially over the business cycle, life cycle, and for individuals. We show that debt changes at the same time as credit, so credit utilization is remarkably stable. From ages 20–40, for example, credit card limits grow by more than 700...

The selfish life-cycle model or hypothesis is, together with the dynasty or altruism model, the most widely used theoretical model of household behavior in economics, but does this model apply in the case of a country like Japan, which is said to have closer family ties than other countries? In...

This paper examines the impact of income growth and income inequality on household saving rates and payoffs in a non-cooperative game where each player’s payoff depends on her present and future consumption and her rank in the present consumption distribution. The setting is a pooling...

This paper examines the impact of income growth and income inequality on household saving rates and payoffs in a non-cooperative game where each player's payoff depends on her present and future consumption and her rank in the present-consumption distribution. The setting is a pooling...

This paper aims to fill the gaps in the analysis of risk‐sharing channels at the microlevel, both within and across households. Using data from the Bank of Italy's Survey on Household Income and Wealth covering the financial crisis, we are able to quantify in a unified and consistent framework...