Consumption heterogenity over the business cycle
De Giorgi, Giacomo (Stanford University. Department of Economics)
Gambetti, Luca (Universitat Autònoma de Barcelona. Departament d'Economia i d'Història Econòmica)
Universitat Autònoma de Barcelona. Unitat de Fonaments de l'Anàlisi Econòmica
Institut d'Anàlisi Econòmica

Date:	2012
Description:	54 p.
Abstract:	We study consumption heterogeneity over the business cycle. Using household panel data from 1984 to 2010 in the US we find that the welfare cost of the business cycle is non-negligible, once agents heterogeneity is taken into account, and sums to about 1% of yearly consumption. This is due to the structure of comovements between the different parts of the consumption distribution, in particular the tails are highly volatile and negatively related to each other. We also find that business cycle fluctuations originating from exogenous financial shocks only hit the top end of the consumption distribution and therefore reduce consumption inequality.
Rights:	Tots els drets reservats.
Language:	Anglès
Series:	Departament d'Economia i d'Història Econòmica. Unitat de Fonaments de l'Anàlisi Econòmica / Institut d'Anàlisi Econòmica (CSIC). Working papers
Series:	Working papers ; 904.12
Document:	Working paper
Subject:	Consumption, Heterogeneity, Aggregate Shocks, Structural Factor Model, FAVAR

54 p, 408.3 KB

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Research literature > Working papers > Fundamentals Unit of the Economic Analysis. Working papers