Sticky expectations and consumption dynamics
Christopher Carroll,
Edmund Crawley,
Jiri Slacalek,
Kiichi Tokuoka () and
Matthew White ()
No 2152, Working Paper Series from European Central Bank
Abstract:
Macroeconomic models often invoke consumption "habits" to explain the substantial persistence of macroeconomic consumption growth. to explain the substantial But a large literature has found no evidence of habits in the micro-economic datasets that measure the behavior of individual households. We show that the apparent conflict can be explained by a model in which consumers have accurate knowledge of their personal circumstances but `sticky expectations' about the macro-economy. In our model, the persistence of aggregate consumption growth reflects consumers' imperfect attention to aggregate shocks. Our proposed degree of (macro) inattention has negligible utility costs, because aggregate shocks constitute only a tiny proportion of the uncertainty that consumers face. JEL Classification: D83, D84, E21, E32
Keywords: consumption; habits; imperfect information; inattention; sticky expectations (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-mac
Note: 1111765
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)
Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2152.en.pdf (application/pdf)
Related works:
Journal Article: Sticky Expectations and Consumption Dynamics (2020) 
Working Paper: Sticky Expectations and Consumption Dynamics (2018) 
Working Paper: Sticky Expectations and Consumption Dynamics (2018) 
Working Paper: Sticky Expectations and Consumption Dynamics (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20182152
Access Statistics for this paper
More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().