We analyze the life cycle consumption choice model for multiple goods, focusing on the distinction between durables and … good, the optimal consumption plan is not myopic. Instead, it depends on past as well as on (expected) future prices. The … consumption of perishables ceases to be myopic as well. The solutions show that durables play an important part in intertemporal …

This paper describes the transmission of income inequality into consumption inequality and in so doing investigates the … degree of insurance to income shocks. It combines panel data on income from the PSID with consumption data from repeated CEX … found to play an important role in insuring permanent shocks. Adding durable expenditures to the consumption measure …

consumption data. We develop a specific approximation to the optimal consumption growth rule and use Monte Carlo evidence to show …

Recent theoretical contributions have suggested consumption externalities, or peergroup effects, as a potential … intertemporal consumption choice is a completely open question. To shed some light on the issue, we derive an extension of the … standard life-cycle model that allows for consumption externalities. The analysis is complicated by the challenge of …

This paper uses panel data on household consumption and income to evaluate the degree of insurance to income shocks …. Our aim is to describe the transmission of income inequality into consumption inequality. Our framework nests the special …-sectional distribution of consumption growth, and analyzing the way these two measures of household welfare correlate over time. We combine …