This paper studies household consumption behavior when saving motives differ due to preference or income risk heterogeneity. I show that self-insurance operates along two margins: a standard liquidity margin determined by the level of current resources and an intertemporal margin governed by...

We study the evolution of consumption expenditure and its distribution over the life-cycle. We estimate age and cohort effects relying on household-level consumption survey data, reaching several conclusions. First, we find significant differences in durable and nondurable life-cycle consumption...

We set up a life cycle model with real interest rate risk to demonstrate that real interest rates have implications for optimal household consumption and investments. Lower interest rates lead to higher optimal stock investments and lower consumption. Ignoring the time-varying nature of real...

We show how tax kinks can be used to estimate the marginal propensity to consume (MPC). Tax kinks create discrete changes in the relationship between taxable income and disposable income, which - under a set of testable assumptions - enables causal identification of the spending response to...

Earnings uncertainty is central to most heterogeneous-household models. Yet, there is surprisingly little evidence on how subjective uncertainty is related to consumption behavior. Using unique data from the Survey of Consumer Expectations, we show that the marginal propensity to consume (MPC)...

Earnings uncertainty is central to most heterogeneous-household models. Yet, there is surprisingly little evidence on how subjective uncertainty is related to consumption behavior. Using unique data from the Survey of Consumer Expectations, we show that the marginal propensity to consume (MPC)...

This paper investigates the wealth, consumption, and savings behavior of elderly individuals through the lens of the life-cycle hypothesis. Using data from Survey of Health, Ageing and Retirement, we employ Student's t-test to test differences between pre-retirement and retirement age groups....

We elicit the intertemporal Marginal Propensity to Consume (iMPC) based on hypothetical different size lottery winnings through questions in the 2023-24 Italian Survey of Consumer Expectations (ISCE). Survey respondents were asked to allocate three hypothetical lottery winning amounts (€1,000,...

Using detailed micro data, we document that households often use "stimulus" checks to pay down debt, especially those with low net wealth-to-income ratios. To rationalize these patterns, we introduce a borrowing price schedule into an otherwise standard incomplete markets model. Because interest...

We estimate the unconditional distribution of the marginal propensity to consume (MPC) using clustering regression applied to the 2008 economic stimulus payments. By deviating from the standard approach of estimating MPC heterogeneity using interactions with observables, we can recover the full...