Life-cycle consumption, precautionary saving, and risk sharing: an integrated analysis using household panel data
Abstract
This paper presents an integrated model of household consumption behavior and examines its testable implications for various theories of consumption, using panel data on Korean households. The model is framed with an extended Euler equation by incorporating aggregate/idiosyncratic and anticipated/unanticipated income changes with aggregate and idiosyncratic income risk measures. The model can test seven restricted but competing hypotheses such as life-cycle and precautionary saving with and without liquidity constraints, complete risk sharing, and incomplete risk sharing with and without precautionary saving. Each alternative hypothesis is rejected in favor of the integrated model to explain households’ consumption behavior in the panel.
Acknowledgments
We thank the referees for helpful and constructive comments and suggestions that helped us to improve the paper. Thanks also go to Robert Pusinelli for comments on an earlier version of the paper.
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Artikel in diesem Heft
- Advances
- Does microfinance reduce poverty? Some international evidence
- Exchange rate policy and the role of non-traded goods prices in real exchange rate fluctuations
- Democracy and income: taking parameter heterogeneity and cross-country dependency into account
- Pass-through of imported input prices to domestic producer prices: evidence from sector-level data
- Economic policy uncertainty and household inflation uncertainty
- Corruption, fiscal policy, and growth: a unified approach
- Monetary policy and energy price shocks
- Government education expenditures and economic growth: a meta-analysis
- Has the forecasting performance of the Federal Reserve’s Greenbooks changed over time?
- Life-cycle consumption, precautionary saving, and risk sharing: an integrated analysis using household panel data
- Can removing the tax cap save Social Security?
- A non-monotonic relationship between public debt and economic growth: the effect of financial monopsony
- The Euler equation around the world
- Structural change and non-constant biased technical change
- Contributions
- Trade and growth in a model of allocative inefficiency
- Macroeconomic Shocks and Corporate R&D
Artikel in diesem Heft
- Advances
- Does microfinance reduce poverty? Some international evidence
- Exchange rate policy and the role of non-traded goods prices in real exchange rate fluctuations
- Democracy and income: taking parameter heterogeneity and cross-country dependency into account
- Pass-through of imported input prices to domestic producer prices: evidence from sector-level data
- Economic policy uncertainty and household inflation uncertainty
- Corruption, fiscal policy, and growth: a unified approach
- Monetary policy and energy price shocks
- Government education expenditures and economic growth: a meta-analysis
- Has the forecasting performance of the Federal Reserve’s Greenbooks changed over time?
- Life-cycle consumption, precautionary saving, and risk sharing: an integrated analysis using household panel data
- Can removing the tax cap save Social Security?
- A non-monotonic relationship between public debt and economic growth: the effect of financial monopsony
- The Euler equation around the world
- Structural change and non-constant biased technical change
- Contributions
- Trade and growth in a model of allocative inefficiency
- Macroeconomic Shocks and Corporate R&D