Time Variation in Lifecycle Consumption and Income

Yunus Aksoy, Henrique Basso and Carolyn St Aubyn

No 1904, BCAM Working Papers from Birkbeck Centre for Applied Macroeconomics

Abstract: We document systematic and significant time variation in the profiles of lifecycle consumption expenditures in the US. Lifecycle consumption profiles have consistently become flatter through time. Pooling data across different periods to identify consumption profiles masks relevant time variation and may artificially generate the well known hump-shaped consumption age profile. We also identify the effect of perceived housing wealth on lifecycle consumption profiles. Housing influenced lifecycle consumption particularly from 2006 onwards and for older households. We propose mechanisms that may account for the estimated results employing an overlapping generations model with perceived housing wealth and time varying borrowing constraints

Keywords: Age profile of Consumption; Structural Trends; House Prices (search for similar items in EconPapers)
JEL-codes: E21 J11 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-age, nep-dge, nep-mac and nep-ure
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https://eprints.bbk.ac.uk/28709/8/28709a.pdf First version, 2019

Related works:
Working Paper: Time variation in lifecycle consumption and income (2021)
Working Paper: Time Variation in Lifecycle Consumption and Income (2020)
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