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 …

's expected return is determined by its equilibrium risk to consumption. Rather than measure the risk of a portfolio by the … crosssectional returns - we measure the risk of a portfolio by its ultimate consumption risk defined as the covariance of its return … and consumption growth over the quarter of the return and many following quarters. While contemporaneous consumption risk …

consumption changes in the US over the period 1952-2001. Theoretically, the effect of labour income risk on consumption changes is …We investigate the importance of aggregate and consumer-specific or idiosyncratic labour income risk for aggregate … decomposed into an aggregate and into an idiosyncratic part. Empirically, aggregate risk is modelled through a GARCH process on …

producing human capital. We also demonstrate that this attenuation effect tends to concentrate generational consumption risk … into an i.i.d. generational consumption shock. In other words, each generation bears all of the risk associated with their …

This paper aims to test the microfoundations of consumption models and quantify the macro implications of heterogeneity … in consumption behavior. We propose a new empirical method to estimate the sensitivity of consumption to permanent and … sensitive to income shocks than those who stand to gain. Following a 1 percentage point rate increase, we estimate consumption …

individual consumption risk in the economy. It is also known from Barillas et al. (2009) to increase if agents in the economy … business cycles in an economy with consumers who face individual consumption risk and who fear model misspecification. We find …The welfare cost of random consumption fluctuations is known from De Santis (2007) to be increasing in the level of …

such state-dependent indivisible consumption opportunities influences a person’s risk attitudes. In general, people are not … risk averse anymore even if utility from divisible consumption is concave. I propose a definition of insurance in the …Some consumption opportunities are both indivisible and only valuable in particular tates of nature. The existence of …

individual consumption risk in the economy. It is also known from Barillas et al. (2009) to increase if agents in the economy … business cycles in an economy with consumers who face individual consumption risk and who fear model misspecification. We find …The welfare cost of random consumption fluctuations is known from DeSantis (2007) to be increasing in the level of …

Standard applications of the consumption-based asset pricing model make the assumption that goods and services within … the nondurable consumption bundle are substitutes. We estimate substitution elasticities between different consumption … bundles and show that households cannot substitute energy consumption by consumption of other nondurable goods or services. As …