Showing 1 - 10 of 78
We study the cyclical dynamics of consumption in the euro area (EA) and the large EA countries by distinguishing … cross-country heterogeneity in how different factors (including durable-specific ones) explain consumption; (iii) the … strength of spillovers from durable to nondurable consumption, as predicted by theory, is empirically correlated with how much …
Persistent link: https://www.econbiz.de/10012422048
Most of the empirical literature on consumption behaviour over the last decades has focused on estimating Euler … policy relevant issues. Alternatively, many papers have proposed using the consumption function to forecast behaviour. This … paper follows in this tradition, by deriving an analytical consumption function in the presence of intertemporal non …
Persistent link: https://www.econbiz.de/10011604618
realizations is front loaded, a closed form aggregate consumption function with CRRA preferences is derived. To have a closed form … solution we assume that consumers solve their intertemporal optimization problem sequentially. First they assess riskadjusted … life-time wealth and then the optimal consumption path. The derived model captures precautionary saving, which is dependent …
Persistent link: https://www.econbiz.de/10011604811
In this paper we examine the link between wage inequality and consumption inequality using a life cycle model that … incorporates household consumption and family labour supply decisions. We derive analytical expressions based on approximations for … the dynamics of consumption, hours, and earnings of two earners in the presence of correlated wage shocks, non …
Persistent link: https://www.econbiz.de/10011605701
The European fiscal governance framework remains incomplete, hindering policy coordination during economic shocks and affecting the transmission of the single monetary policy. High public debt and low public investment worsen resilience across Member States. Many policymakers, institutions, and...
Persistent link: https://www.econbiz.de/10015199448
Households' income heterogeneity is important to explain consumption dynamics in response to aggregate macro … uncertainty: an increase in uncertainty generates a consumption drop that is stronger for income poorer households. At the same … who, being subject to higher unemployment risk, contract consumption more in response to heightened uncertainty, and firms …
Persistent link: https://www.econbiz.de/10015199460
This paper analyzes the link between monetary policy and capital misallocation in a New Keynesian model with heterogeneous firms and financial frictions. In the model, firms with a high return to capital increase their investment more strongly in response to a monetary policy expansion, thus...
Persistent link: https://www.econbiz.de/10014543648
homogeneous MPC rates. Consumption inequality is countercyclical in this setting and a high degree of leverage amplifies the …
Persistent link: https://www.econbiz.de/10012661618
We propose a theoretical framework to reconcile episodes of V-shaped and L-shaped recovery, en- compassing the behaviour of the U.S. economy before and after the Great Recession. In a DSGE model with endogenous growth, negative demand shocks destroy productive capacity, moving GDP to a lower...
Persistent link: https://www.econbiz.de/10012661624
One of the most significant characteristics of optimizing models is that the behavioral equations involved are typically forward looking, i.e. agents are concerned about the futures rather than the past. This creates difficulties when modelling some of the business-cycle patterns widely observed...
Persistent link: https://www.econbiz.de/10011604193