Life-cycle Wealth Accumulation and Consumption Insurance

Claudio Campanale (claudiogiovanni.campanale@unito.it) and Marcello Sartarelli

No 186, CeRP Working Papers from Center for Research on Pensions and Welfare Policies, Turin (Italy)

Abstract: Households appear to smooth consumption in the face of income shocks much more than implied by life-cycle versions of the standard incomplete market model under reference calibrations. In the current paper we explore in detail the role played by the life-cycle profile of wealth accumulation. We show that a standard model parameterized to match the latter can rationalize between 83 and more than 97 percent of the consumption insurance against permanent earnings shocks empirically estimated by Blundell, Pistaferri and Preston (2008), depending on the tightness of the borrowing limit.

Pages: 38 pages
Date: 2018-11
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http://www.cerp.carloalberto.org/life-cycle-wealth ... nsumption-insurance/ (application/pdf)

Related works:
Journal Article: Life-cycle wealth accumulation and consumption insurance (2024)
Working Paper: Life-cycle Wealth Accumulation and Consumption Insurance (2018)
Working Paper: Life-cycle Wealth Accumulation and Consumption Insurance (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:crp:wpaper:186

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