Demographics and Monetary Policy Shocks

Kimberly Berg, Chadwick Curtis, Steven Lugauer and Nelson Mark

No 25970, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We decompose the response of aggregate consumption to monetary policy shocks into contributions by households at different stages of the life cycle. This decomposition finds that older households have a higher consumption response than younger households. Amongst older households, the consumption response is also increasing in income. This, along with data on age-related net wealth, presents evidence for a wealth effect playing a role in driving the response patterns. This mechanism is studied further in a partial-equilibrium life-cycle model of consumption, saving, and labor-supply decisions. The model qualitatively explains the empirical patterns. Understanding the heterogeneity in consumption responses across age groups is important for understanding the transmission of monetary policy, especially as the U.S. population grows older.

JEL-codes: E0 E21 E52 J1 J11 (search for similar items in EconPapers)
Date: 2019-06
New Economics Papers: this item is included in nep-age, nep-dem, nep-lab, nep-mac and nep-mon
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published as Kimberly A. Berg & Chadwick C. Curtis & Steven Lugauer & Nelson C. Mark, 2021. "Demographics and Monetary Policy Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(6), pages 1229-1266, September.

Downloads: (external link)
http://www.nber.org/papers/w25970.pdf (application/pdf)

Related works:
Journal Article: Demographics and Monetary Policy Shocks (2021)
Working Paper: Demographics and Monetary Policy Shocks (2019)
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:nbr:nberwo:25970

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25970

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().