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 decompose idiosyncratic changes in income into predictable life … evolution of consumption and income inequality well and delivers two main results. First, we find that permanent changes in …

We show that countries that take on more international risk are rewarded with higher expected consumption growth …. International risk is defined as the beta of a country’s consumption growth with world consumption growth. High-beta countries hold … is negatively correlated with expected consumption growth. Therefore, uninsured shocks affect not only current growth …

This paper shows that the combination of habit formation - present consumption creating additional consumption needs in …-best setting the optimal solution can be decentralized by a simple "Pigouvian" (paternalistic) consumption tax (along with suitable … lump-sum taxes). In a second-best setting, when personalized lump-sum transfers are not available, consumption taxes may …