Life-cycle Wealth Accumulation and Consumption Insurance
Claudio Campanale () and
Marcello Sartarelli ()
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Claudio Campanale: Universidad de Alicante
Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)
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 pro¿le 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.
Keywords: precautionary savings; Epstein-Zin; consumption insurance coe¿cients; life-cycle. (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ias and nep-mac
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http://www.ivie.es/downloads/docs/wpasad/wpasad-2018-06.pdf Fisrt version / Primera version, 2018 (application/pdf)
Working Paper: Life-cycle Wealth Accumulation and Consumption Insurance (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2018-06
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