Life-cycle Wealth Accumulation and Consumption Insurance

Claudio Campanale () and Marcello Sartarelli

No 55, Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

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.

Keywords: Precautionary savings; Epstein-Zin; Consumption insurance coefficients; Life-cycle. (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2018-05
New Economics Papers: this item is included in nep-dge, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.bemservizi.unito.it/repec/tur/wpapnw/m55.pdf First version, 2018 (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)
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:tur:wpapnw:055

Access Statistics for this paper

More papers in Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino Contact information at EDIRC.
Bibliographic data for series maintained by Daniele Pennesi ().