Alan, Sule and Browning, Martin and Ejrnæs, Mette (2018) Income and Consumption: a Micro Semistructural Analysis with Pervasive Heterogeneity. Journal of Political Economy, 126 (5). pp. 1827-1864. DOI https://doi.org/10.1086/699186
Alan, Sule and Browning, Martin and Ejrnæs, Mette (2018) Income and Consumption: a Micro Semistructural Analysis with Pervasive Heterogeneity. Journal of Political Economy, 126 (5). pp. 1827-1864. DOI https://doi.org/10.1086/699186
Alan, Sule and Browning, Martin and Ejrnæs, Mette (2018) Income and Consumption: a Micro Semistructural Analysis with Pervasive Heterogeneity. Journal of Political Economy, 126 (5). pp. 1827-1864. DOI https://doi.org/10.1086/699186
Abstract
We develop a model of consumption and income that allows for pervasive heterogeneity in the parameters of both processes. Introducing co-dependence between household income parameters and preference parameters, we also allow for heterogeneity in the impact of income shocks on consumption. We estimate the parameters of the model using a sample from the PSID, covering the period 1968 to 2009. We find considerable co-dependent heterogeneity in the parameters governing income and consumption processes. Our results suggest a great deal of heterogeneity in the reaction of consumption to income shocks, highlighting the heterogeneity in the self-insurance available to households.
Item Type: | Article |
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Uncontrolled Keywords: | preference heterogeneity; consumption; income. |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 19 Feb 2018 16:54 |
Last Modified: | 16 May 2024 19:16 |
URI: | http://repository.essex.ac.uk/id/eprint/21199 |
Available files
Filename: abe_acceptedmanuscript_2017.pdf