Showing 1 - 10 of 28
We study a model in which financial sophistication improves portfolio returns and therefore the incentive to substitute consumption intertemporally. The model delivers a Euler equation in which consumption growth is positively correlated with financial sophistication. We test the model's...
Persistent link: https://www.econbiz.de/10011084488
Survey data on household expectations of inflation are routinely used in economic analysis, yet it is not clear to what extent households are able to articulate their expectations in survey interviews. We propose an alternative approach to recovering households' implicit expectations of...
Persistent link: https://www.econbiz.de/10005067515
Previous tests for liquidity constraints using consumption Euler equations have frequently used asset-based sample separation rules, arguing that low wealth consumers are more likely to be constrained. We propose an alternative sample separation rule using direct information on borrowing...
Persistent link: https://www.econbiz.de/10005789106
Among the most important pieces of empirical evidence against the standard representative-agent, consumption-based asset pricing paradigm are the formidable unconditional Euler equation errors the model produces for a broad stock market index return and short-term interest rate. Unconditional...
Persistent link: https://www.econbiz.de/10005791515
The consumption Euler equation is a building block of modern macro theory. Yet, the existing evidence on aggregate data offers very conflicting results for the estimates of the degree of forward-lookingness and interest rate semi-elasticity. The disappointing performance can be rationalized by...
Persistent link: https://www.econbiz.de/10008854511
Does financial development result in capital being reallocated more rapidly to industries where it is most productive? We argue that if this was the case, financially developed countries should see faster growth in industries with investment opportunities due to global demand and productivity...
Persistent link: https://www.econbiz.de/10005504771
We construct estimates of educational attainment for a sample of OECD countries using previously unexploited sources. We follow a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification...
Persistent link: https://www.econbiz.de/10005498069
This Paper looks at public sector pay in Britain. We present a novel instrument that exploits the variation in public sector status across individuals arising from the privatisation programme of the 1990s. We show formally that results that are estimated may thereby be robust to self-selection...
Persistent link: https://www.econbiz.de/10005498162
Existing empirical estimates of US nationwide tax multipliers vary from close to zero to very large. Using narrative measures as proxies for structural shocks to total tax revenues in an SVAR, we estimate tax multipliers at the higher end of the range: around two on impact and up to three after...
Persistent link: https://www.econbiz.de/10011083694
We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders' expectations based on publicly...
Persistent link: https://www.econbiz.de/10011083832