Title of article
Heterogeneouslife-cycleprofiles,incomeriskand consumption inequality
Author/Authors
Giorgio E. Primiceri، نويسنده , , ThijsvanRens، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
20
From page
20
To page
39
Abstract
WastheincreaseinincomeinequalityintheUSduetopermanentshocksormerelyto
an increaseinthevarianceoftransitoryshocks?Theimplicationsforconsumptionand
welfare dependcruciallyontheanswertothisquestion.WeuseConsumerExpenditure
Survey (CEX)repeatedcross-sectiondataonconsumptionandincometodecompose
idiosyncraticchangesinincomeintopredictablelife-cyclechanges,transitoryand
permanentshocksandestimatethecontributionofeachtototalinequality.Ourmodel
fits thejointevolutionofconsumptionandincomeinequalitywellanddeliverstwo
mainresults.First,wefindthatpermanentchangesinincomeexplainalloftheincrease
in inequalityinthe1980sand1990s.Second,wereconcilethisfindingwiththefactthat
consumptioninequalitydidnotincreasemuchoverthisperiod.Ourresultssupportthe
view thatmanypermanentchangesinincomearepredictableforconsumers,evenif
theylookunpredictabletotheeconometrician,consistentwithmodelsofhetero-
geneous incomeprofiles.
Keywords
ConsumptionInequalityRiskIncomplete marketsHeterogeneity
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846271
Link To Document