Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate deep economy-wide preference parameters, which are useful for policy evaluation. The underlying demand-aggregation properties that this approach requires, should be easy to empirically disprove:...

Much analysis in macroeconomics empirically addresses economy-wide incentives behind consumer/investment choices by using insights from the way a single representative household would behave. Heterogeneity at the micro level can jeopardize attempts to back up the representative consumer...

Previous experimental results (Ballinger et al., 2003 and Carbone and Hey, 2004) have found that many agents fail to correctly take into account the length of the planning horizon also finding some support (See Carbone, 2006) for descriptive models, such as the Rolling Model. This paper presents...

We show that the optimal consumption of an individual over the life cycle can have the hump shape (inverted U-shape) observed empirically if the preferences of the individual exhibit internal habit formation. In the absence of habit formation, an impatient individual would prefer a decreasing...

This paper investigates the impact of tax reforms on capital accumulation and welfare in both a model without habits (benchmark model) and a model with habits. In the benchmark model, the examined tax reforms generally lead to higher welfare. In contrast, in the model with habits the same tax...

This paper deals with different concepts of income elasticities of demand for a heterogenous population and the relationship between individual and aggregate elasticities is analyzed. In general, the aggregate elasticity is not equal to the mean of individual elasticities. The difference depends...

This paper uses detailed diary information from the British Family Expenditure Survey (FES) to investigate the expenditure patterns of school-age children. We estimate a Quadratic Almost Ideal Demand System, and find that, whilst most commodities are normal goods, sweets and toys are luxury...

Recent advances in the collective model literature suggest ways to estimate the complete allocation of resources within households, using assignable goods and assuming adult preference similarity across demographic groups (or across spouses). While it makes welfare analysis at the individual...

With the widespread growth of online commerce, we observe an increasing amount of refunds on purchases. Do these refunds affect consumption differently than regular income such as salaries? This paper uses transaction-level data from a bank to examine the marginal propensity to consume (MPC) of...

We study whether households can distinguish persistent from transitory income shocks, and the implications for consumption-saving behavior. We construct a novel consumption-saving model where the household must infer the persistent component of its income process from actual income realizations...