Asymmetric Consumption Effects of Transitory Income Shocks

Dimitris Christelis, Dimitris Georgarakos, Tullio Jappelli (), Luigi Pistaferri and Maarten van Rooij

The Economic Journal, 2019, vol. 129, issue 622, 2322-2341

Abstract: We use the responses of a representative sample of Dutch households to survey questions that ask how much their consumption would change in response to unexpected, transitory income shocks (positive or negative). The questionnaire also distinguishes between relatively small income changes (a one-month increase or drop in income), and relatively larger ones (equal to three-months' income). The results are broadly in line with models of intertemporal choice with precautionary saving, borrowing constraints and finite horizons.

Date: 2019
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Working Paper: Asymmetric Consumption Effects of Transitory Income Shocks (2017)
Working Paper: Asymmetric Consumption Effects of Transitory Income Shocks (2017)
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