Time Variation in Lifecycle Consumption and Income

Yunus Aksoy, Henrique Basso and Carolyn St Aubyn

No 8162, CESifo Working Paper Series from CESifo

Abstract: We document systematic and significant time variation in US lifecycle non-durable consumption profiles. Consumption profiles have consistently become flatter: differences in consumption across generations have decreased. Pooling data across different periods to identify lifecycle profiles masks relevant time variations and may artificially 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. The contributions of credit, housing and interest rates changes are quantitatively small.

Keywords: age profile of consumption; age profile of income; consumption heterogeneity; time variation; pooling (search for similar items in EconPapers)
JEL-codes: E21 J11 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac
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Related works:
Working Paper: Time variation in lifecycle consumption and income (2021)
Working Paper: Time Variation in Lifecycle Consumption and Income (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8162

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