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Aggregate dividends and consumption smoothing

Huang-Meier, W and Freeman, MC (2015) 'Aggregate dividends and consumption smoothing.' International Review of Financial Analysis, 43. pp. 324-335. ISSN 1057-5219

Manuscript_AggregateDividendsAndConsumptionSmoothing_v2.pdf - Accepted Version

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We show that net equity payouts from the corporate sector play a crucial role in helping individuals manage their consumption path across the business cycle. In particular, we show that, as investors' desire to smooth consumption increases, optimal aggregate dividends become both more volatile and more counter-cyclical to help counterbalance pro-cyclical labor income. These findings are robust to whether or not agency conflicts exist in the economy.

Item Type: Article
Uncontrolled Keywords: Aggregate dividend policy; Consumption smoothing; Habit formation; Dynamic stochastic general equilibrium models
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 17 Sep 2015 16:08
Last Modified: 06 Jan 2022 13:39

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