Time variation in lifecycle consumption and income

Yunus Aksoy, Henrique Basso and Carolyn St Aubyn ()
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Carolyn St Aubyn: Birkbeck, University of London

No 2111, Working Papers from Banco de España

Abstract: We document systematic and signicant time variation in US lifecycle nondurable consumption profiles. Consumption profiles have consistently become flatter: intergenerational differences in consumption across age groups have decreased over time. Pooling data across different periods to identify lifecycle profiles and failing to account for unobserved heterogeneity masks relevant time variations and may articially generate hump-shaped consumption age profiles. The main driver behind lifecycle consumption variations are lifecycle income changes, which display similar flattening. Employing a lifecycle model we show changes in income are sufficient to match the movements in consumption.

Keywords: age profile of consumption; age profile of income; cohort effects; consumption heterogeneity; time variation; pooling (search for similar items in EconPapers)
JEL-codes: E21 J11 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2021-01
New Economics Papers: this item is included in nep-age and nep-mac
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https://www.bde.es/f/webbde/SES/Secciones/Publicac ... 21/Files/dt2111e.pdf First version, January 2021 (application/pdf)

Related works:
Working Paper: Time Variation in Lifecycle Consumption and Income (2020)
Working Paper: Time Variation in Lifecycle Consumption and Income (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2111

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