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Humps and Bumps in Lifetime Consumption
Orazio P. Attanasio, James Banks, Costas Meghir and Guglielmo Weber
Journal of Business & Economic Statistics
Vol. 17, No. 1 (Jan., 1999), pp. 22-35
Stable URL: http://www.jstor.org/stable/1392236
Page Count: 14
You can always find the topics here!Topics: Simulations, Demography, Age, Consumer economics, Consumption function, Household consumption, Consumer profiles, Consumer information, Euler equations, College graduates
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In this article we argue that the life-cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump-shaped consumption profiles over age that are very similar to those observed in household-level data sources and, in particular, match the differences in shape across different education groups. Liquidity constraints or myopia are not required to explain the empirical features of observed life-cycle patterns.
Journal of Business & Economic Statistics © 1999 American Statistical Association