This paper reports on an experiment designed to examine the effects of small-scale changes in wealth on risk attitudes. We find that the money given prior to risky choices does not induce a change of subjects' risk preferences. This result supports a key assumption in a recent literature over...

The life-cycle hypothesis implies that consumption would not decline at retirement. However, several studies found relevant declines in food consumption after retirement for the United States. Others concluded that this contradiction of the life-cycle hypothesis is solved by allowing for broader...

The study seeks to examine stock market wealth effects on private non-durable consumption for Zimbabwean households using quarterly data from 1994(1) to 2008(2). The bounds testing approach to cointegration is employed to test the long run relationship between stock market wealth and...

The effect of wealth on consumption is an issue of longstanding interest to economists. Analysts believe that fluctuations in household wealth have driven major swings in economic activity. This paper considers so-called wealth effects - the impact of changes in wealth on household consumption...

Eine stabile Geldnachfrage ist eine Grundvoraussetzung für eine erfolgreiche Geldpolitik der Europäischen Zentralbank (EZB). In diesem Beitrag wird untersucht, ob die Geldnachfrage im Euroraum auch im Laufe der Finanzkrise die Bedingung der Stabilität erfüllt. Die Ergebnisse zeigen, dass die...

We consider a firm which pays a worker for his effort over several periods. The more the firm pays in one period, the wealthier the worker is in the following periods, and so the more he must be paid for a given effort. This wealth effect can induce an employer to pay little initially and more...

Quasilinear preferences on a public good and a numeraire good are limits of preferences where both goods are normal. The set of equilibria of the voluntary contribution (or private provision) game is easily characterized under quasilinearity by: top valuators aggregately contribute their common...

We study the role of asset revaluation in the monetary transmission mechanism. We build an analytical heterogeneous-agents model with two main ingredients: i) rare disasters; ii) heterogeneous beliefs. The model captures time-varying risk premia and precautionary savings in a setting that nests...

This study derives an optimal macroeconomic policy combination for financial sector stability in the United Kingdom by employing a New Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) framework. The empirical results obtained show that disciplined fiscal and accommodative monetary...

We solve the principal-agent problem of a monopolist insurer selling to an agent whose riskiness (loss chance) is private information, a problem introduced in Stiglitz's (1977) seminal paper. For an \emph{arbitrary} type distribution, we prove several properties of optimal menus, such as...