Consumption over the Life Cycle: Some Facts from Consumer Expenditure Survey Data

Jesus Fernandez-Villaverde and Dirk Krueger

No 7, Centro de Alti­simos Estudios Ri­os Pe©rez(CAERP) from Centro de Altisimos Estudios Rios Perez (CAERP)

Abstract: This paper uses a seminonparametric model and Consumer Expenditure Survey data to estimate life cycle profiles of consumption, controlling for demographics, cohort and time effects. In addition to documenting profiles for total and nondurable consumption, we devote special attention to the age expenditure pattern for consumer durables. We find hump-shaped paths over the life cycle for total, for nondurable and for durable expenditures. Changes in household size account for roughly half of these humps. The other half remains unaccounted for by the standard complete markets life cycle model. Our results imply that households do not smooth consumption over their lifetimes. This is especially true for services from consumer durables. Bootstrap simulations suggest that our empirical estimates are tight and sensitivity analysis indicates that the computed profiles are robust to a large number of different specifications.

Keywords: Consumption; life cycle profiles; durables; nonparametric estimation; bootstrp; partially linear models (search for similar items in EconPapers)
JEL-codes: C14 D12 D91 E21 J10 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2002-11
New Economics Papers: this item is included in nep-mac
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Related works:
Working Paper: Consumption over the Life Cycle: Some Facts from Consumer Expenditure Survey Data (2004)
Working Paper: Consumption over the Life Cycle: Some Facts from Consumer Expenditure Survey Data (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cae:caerpp:7

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