This paper studies the dynamics of portfolio rebalancing and consumption smoothing in the presence of non-convex portfolio adjustment costs. The goal is to understand a household's response to income and return shocks. The model includes the choice of two assets: one riskless without adjustment...

This paper studies the dynamics of portfolio rebalancing and consumption smoothing in the presence of non-convex portfolio adjustment costs. The goal is to understand a household's response to income and return shocks. The model includes the choice of two assets: one riskless without adjustment...

This paper tests one specific monetary transmission mechanism through households: portfolio rebalancing. We use a unique panel dataset of household's credit and debit card spending, ATM withdrawals, financial investments into risky assets such as mutual funds and equities, as well as bank...