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Income and Consumption Smoothing Among US States: Regions or Clubs?

Sørensen, Bent E; Yosha, Oved - C.E.P.R. Discussion Papers - 1997

We measure the amount of income insurance and cross-sectional consumption smoothing (lending and borrowing) achieved within subgroups of states, such as regions or clubs, e.g. the club of rich states. We find that there is as much income insurance between, as well as within, regions. By...

Persistent link: https://www.econbiz.de/10005504778

Debt and Incomplete Financial Markets: A Case for Nominal GDP Targeting

Sheedy, Kevin D. - C.E.P.R. Discussion Papers - 2014

Financial markets are incomplete, thus for many households borrowing is possible only by accepting a financial contract that specifies a fixed repayment. However, the future income that will repay this debt is uncertain, so risk can be inefficiently distributed. This paper argues that a monetary...

Persistent link: https://www.econbiz.de/10011084046

Wealth, Credit Conditions and Consumption: Evidence from South Africa

Aron, Janine; Muellbauer, John - C.E.P.R. Discussion Papers - 2012

and illiquid wealth time series from household balance sheet data for South Africa, previously constructed by the authors …, to explain fluctuations in the ratios of consumption and household debt to income in South Africa, from 1971 to 2005. The …-cycle interpretation. The paper also throws important light on the monetary policy transmission mechanism in South Africa. …

Persistent link: https://www.econbiz.de/10011084339

Limited Nominal Indexation of Optimal Financial Contracts

Meh, Césaire A.; Quadrini, Vincenzo; Terajima, Yaz - C.E.P.R. Discussion Papers - 2015

We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because nominal prices are observed with delay as in Jovanovic and Ueda 1997. More constrained firms sign contracts that are less indexed to inflation and, as a result, their investment is...

Persistent link: https://www.econbiz.de/10011145464

Saving, Growth and Liquidity Constraints

Jappelli, Tullio; Pagano, Marco - C.E.P.R. Discussion Papers - 1992

In the context of an overlapping generations model, we show that liquidity constraints on households: (i) raise the saving rate; (ii) strengthen the effect of growth on saving; and (iii) increase the growth rate if productivity growth is endogenous. These propositions are supported by...

Persistent link: https://www.econbiz.de/10005666537

Preferences, Consumption Smoothing, and Risk Premia

Lettau, Martin; Uhlig, Harald - C.E.P.R. Discussion Papers - 1997

Risk premia in the consumption capital asset pricing model depend on preferences and dividends. We develop a decomposition which allows for the separate treatment of both components. We show that preferences alone determine the risk-return trade-off measured by the Sharpe-ratio. In general, the...

Persistent link: https://www.econbiz.de/10005666799

Consumption, Land Prices and the Monetary Transmission Mechanism in Japan

Muellbauer, John; Murata, Keiko - C.E.P.R. Discussion Papers - 2009

This paper documents the role of consumption in explaining the weak interest rate effect of monetary transmission in Japan. Economic theory suggests circumstances in which a rise in short term real interest rates can increase consumption, contrary to much conventional wisdom. This paper suggests...

Persistent link: https://www.econbiz.de/10005791412

Understanding Trend and Cycle in Asset Values: Bulls, Bears and the Wealth Effect on Consumption

Lettau, Martin; Ludvigson, Sydney - C.E.P.R. Discussion Papers - 2001

This Paper uses restrictions implied by cointegration to identify the permanent and transitory elements (the ‘trend’ and ‘cycle’) of household asset wealth. Our empirical analysis yields answers to the following questions: 1. Is there a large transitory component in household net worth...

Persistent link: https://www.econbiz.de/10005792097

Household Credit in the New Europe: Lending Boom or Sustainable Growth?

Coricelli, Fabrizio; Mucci, Fabio; Revoltella, Debora - C.E.P.R. Discussion Papers - 2006

Retail lending grew very fast in the New Europe region in the last years, prompting a debate on whether such a rapid growth can be considered sustainable. This paper investigates the main determinants of retail lending growth throughout the region. It tries to identify episodes of credit boom...

Persistent link: https://www.econbiz.de/10005792276

Mortgage Markets, Collateral Constraints, and Monetary Policy: Do Institutional Factors Matter?

Calza, Alessandro; Monacelli, Tommaso; Stracca, Livio - C.E.P.R. Discussion Papers - 2007

We study the role of institutional characteristics of mortgage markets in affecting the strength and timing of the effects of monetary policy shocks on house prices and consumption in a sample of OECD countries. With frictionless credit markets, those characteristics should in principle be...

Persistent link: https://www.econbiz.de/10005123820