Consumption and Income Smoothing

Francesco Busato (), Bruno Chiarini and Elisabetta Marzano

Discussion Papers from D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy

Abstract: This paper presents a two sector dynamic general equilibrium model in which income smoothing takes place within the households (intra-temporally), and consumption smoothing takes place among the households (inter-temporally). Idiosyncratic risk sharing within the family is based on an income smoothing contract. There are two sectors in the model, the regular sector and the underground sector, and the smoothing comes from the underground sector, which is countercyclical with respect aggregate GDP. The paper shows that the simulated disaggregated consumption and income series (that are the regular and underground consumption flows) are more sensitive to exogenous changes in sector-specific productivity and tax rates than regular and underground income flows, and that this picture is reversed when the aggregate series are considered.

Keywords: - (search for similar items in EconPapers)
Date: 2006-07-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://economia.uniparthenope.it/ise/sito/DP/DP_13_2006.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to economia.uniparthenope.it:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
Working Paper: CONSUMPTION AND INCOME SMOOTHING (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prt:dpaper:13_2006

Access Statistics for this paper

More papers in Discussion Papers from D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy Contact information at EDIRC.
Bibliographic data for series maintained by Antonietta Milano ( this e-mail address is bad, please contact ).