2 edition of Is consumption growth consistent with intertemporal optimization? found in the catalog.
Is consumption growth consistent with intertemporal optimization?
Orazio P. Attanasio
|Statement||Orazio P. Attanasio, Guglielmo Weber.|
|Series||NBER working paper series -- working paper no. 4795, Working paper series (National Bureau of Economic Research) -- working paper no. 4795.|
|The Physical Object|
|Pagination||30 p. :|
|Number of Pages||30|
Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy Orazio P. Attanasio and Guglielmo Weber* This paper provides a critical survey of the large literature on the life cycle model of consumption, both from an empirical and a theoretical point of Size: 1MB. Setting both the depreciation rate and the rate of time preference at 4% is conventional, while the weight θ= on consumption in the utility function accords with the value generally chosen by real business cycle theorists. 10 The intertemporal elasticity of substitution ε= is consistent with recent estimates obtained by Ogaki and Cited by:
Suppose an economic agent’s life is divided into two periods, the first period constitutes her youth and the second her old age. There is a single consumption good, C, available in both periods. The. aggregate growth and aggregate saving: growth implies that, in a given year, younger cohorts, who are saving, are ‘richer’ in life-time terms, than older ones, who are dis-saving. The higher the rate of growth is, the larger the difference in resources between savers and dis-savers and, therefore, the higher the aggregate rate of saving.
A Bellman equation, named after Richard E. Bellman, is a necessary condition for optimality associated with the mathematical optimization method known as dynamic programming. It writes the "value" of a decision problem at a certain point in time in terms of the payoff from some initial choices and the "value" of the remaining decision problem that results from those initial choices. Intertemporal Choices We want to explain how consumers allocate their consumption over time. This will explain why consumers:» borrow (consume more today than their endowment today)» save/lend (consume less today than their endowment today) 14 Intertemporal Choices, cont’d Simplest setting: two time periods 1, 2. Consumption in period 1: c.
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NBER Working Paper No. Issued in July NBER Program(s):Economic Fluctuations and Growth. In this paper we show that some of the predictions of models of consumer intertemporal optimization are not inconsistent with the patterns of non-durable expenditure observed in.
(conti.) (18) implies that the elasticity of intertemporal substitution (EIS) is d ct+1 ct / ct+1 ct dR/R = d ln ct+1 ct d lnR 1 g.
(19) Hence, increasing g i.e., reducing 1 g make the agent more unwilling to postpone consumption (i.e., more unwilling to save). That™s why we call this type of utility functions the isoelastic utility Size: KB.
Get this from a library. Is consumption growth consistent with intertemporal optimization?: evidence from the consumer expenditure survey. [Orazio P Attanasio; Guglielmo Weber; National Bureau of Economic Research.] -- Abstract: In this paper we show that some of the predictions of models of consumer intertemporal optimization are not inconsistent with the patterns of non-durable expenditure.
Get this from a library. Is consumption growth consistent with intertemporal optimization?: evidence from the consumer expenditure survey. [Orazio P Attanasio; Guglielmo Weber]. In this paper we show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in U.S.
household-level data. We propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations. We estimate preference parameters using the only U.S. micro data set with Cited by: Downloadable.
In this paper we show that some of the predictions of models of consumer intertemporal optimization are not inconsistent with the patterns of non-durable expenditure observed in US household-level data.
Our results and our approach are new in several respects. First, we use the only US micro data set which has direct and complete information on household consumption. Attanasio, Orazio P & Weber, Guglielmo, "Is Consumption Growth Consistent with Intertemporal Optimization.
Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. (6), pagesDecember. Is Consumption Growth Consistent with Intertemporal Optimization. Evidence from the Consumer Expenditure Survey Orazio P.
Attanasio Stanford University, Universitd di Bologna, National Bureau of Economic Research, and Institute for Fiscal Studies Guglielmo Weber University di Padova and Institute for Fiscal Studies.
The Intertemporal Allocation of Consumption: Theory and Evidence Orazio P. Attanasio. NBER Working Paper No. Issued in July NBER Program(s):Economic Fluctuations and Growth Liquidity constraints and, more generally, imperfections in credit markets, can be extremely important for the intertemporal allocation of consumption and have received a substantial amount of attention in the.
The basic structure of this book is simple to understand. It covers optimization methods and applications in discrete time and in continuous time, both in worlds with certainty and worlds with uncertainty.
discrete time continuous time deterministic setup Part I Part II stochastic setup Part III Part IV Table Basic structure of this book. processes such as the relationship in aggregate economics between savings and growth.
Furthermore, since its construction, the LCH has served as the standard economic approach to the study of consumption and savings behavior and has served as a foundational basis for subsequent models of intertemporal Size: KB.
consumption is a normal good, that the consumer will substitute today consumption with future consumption, i.e., c 1 # and c 2 ": However, things get more complicate when we talk about the income e⁄ect. If the consumer is a borrower, an increase in the interest rate reduces his current consumption.
The substitution e⁄ect works inFile Size: 1MB. Intertemporal Choice: An economic term describing how an individual's current decisions affect what options become available in the future. Theoretically, by not consuming today, consumption Author: Daniel Liberto.
A Two-Period Model Consumers Experiments Introduction Intertemporal Decisions Macroeconomics studies how key variables evolve over time The simplest way to think about intertemporal decisions is in a two-period model The ﬁrst period is the current period (or today) The second period represents the future (or tomorrow) Key trade-off: consuming today or consuming in the future,File Size: 1MB.
Today: Consumption and Savings Solow model and Savings Behaviour 2 Recall that in the Solow model the savings rate was an exogenous constant (parameter) therefore aggregate investment was a constant fraction of output/aggregate income But people respond to incentives ⇒ Analyze consumption-savings choice Lecture 9 2/16 Topics in Macroeconomics.
The theory suggests concrete guidelines for applied work, including using nonstandard methods for construction of confidence regions. These results are used to interpret Angrist and Krueger's () estimates of the returns to education: whereas TSLS estimates with many instruments approach the OLS estimate of 6%, the more reliable LIML estimates with fewer instruments fall between 8% and.
The stochastic discount factor is approximated by a time-varying linear function of nondurable consumption growth, commodity price growth, durables stock growth, and disposable income growth. Economic theories of intertemporal consumption seek to explain people's preferences in relation to consumption and saving over the course of their lives.
The earliest work on the subject was by Irving Fisher and Roy Harrod, who described 'hump saving', hypothesizing that savings would be highest in the middle years of a person's life as they saved for : List of largest consumer markets.
Intertemporal choice is the process by which people make decisions about what and how much to do at various points in time, when choices at one time influence the possibilities available at other points in time. These choices are influenced by the relative value people assign to two or more payoffs at different points in time.
Most choices require decision-makers to trade off costs and. of consumption from the combination of the two per-period constraints, is customarily called the \intertemporal budget constraint". Notwithstanding these interpretational issues, we have formalized|and can now proceed to solve|the intertemporal consumption/saving problem of File Size: KB.
Productive consumption, the intertemporal consumption trade-off and growth Article in Journal of Economic Dynamics and Control 26(6) June with 19 Reads How we measure 'reads'.One of the important determinants of the response of saving and consumption to the real interest rate is the elasticity of intertemporal substitution.
That elasticity can be measured by the response of the rate of change of consumption to changes in the expected real interest rated. A detailed study of data for the twentieth-century United States shows no strong evidence that the elasticity of Cited by: INTERTEMPORAL ASSET PRICING WIThOUTCONSUMPTION DATA ABSTRACT This paper proposes a new way to generalize the insights of static asset pricing theory to a multi-period setting.
The paper uses a loglinear approximation to the budget constraint to substitute out consumption from a standard intertemporal asset pricing model. In a.