Humps and bumps in lifetime consumption

Orazio P. Attanasio; James Banks; Costas Meghir; Guglielmo Weber

Humps and bumps in lifetime consumption

Orazio P. Attanasio, James Banks, Costas Meghir, Guglielmo Weber

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

In this article we argue that the life-cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump-shaped consumption profiles over age that are very similar to those observed in household-level data sources and, in particular, match the differences in shape across different education groups. Liquidity constraints or myopia are not required to explain the empirical features of observed life-cycle patterns.

Original language	English
Pages (from-to)	22-35
Number of pages	13
Journal	Journal of Business and Economic Statistics
Volume	17
Issue number	1
Publication status	Published - Jan 1999

Keywords

Hump-shaped consumption profiles
Numerical solutions of life-cycle models
Precautionary saving

Cite this

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title = "Humps and bumps in lifetime consumption",

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AB - In this article we argue that the life-cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump-shaped consumption profiles over age that are very similar to those observed in household-level data sources and, in particular, match the differences in shape across different education groups. Liquidity constraints or myopia are not required to explain the empirical features of observed life-cycle patterns.

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KW - Numerical solutions of life-cycle models

KW - Precautionary saving

M3 - Article

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SP - 22

EP - 35

JO - Journal of Business and Economic Statistics

JF - Journal of Business and Economic Statistics

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Humps and bumps in lifetime consumption

Abstract

Keywords

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