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Asymmetric Consumption Effects of Transitory Income Shocks

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

No 12025, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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

Keywords: Transitory Income Shocks; Positive and Negative Income Shocks; Marginal Propensity (search for similar items in EconPapers)
JEL-codes: D12 D14 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2017-05
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