Working Paper
A leisurely reading of the life-cycle consumption data
Abstract: A puzzle in consumption theory is the observation of a hump in age-consumption profiles. We study a general equilibrium life-cycle economy with capital in which households include both consumption and leisure in their period utility function. We calibrate the model and find that a significant hump in life-cycle consumption is a feature of the equilibrium. Thus inclusion of leisure in household preferences may provide part of the explanation of observed life-cycle consumption humps.
https://doi.org/10.20955/wp.2003.017
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Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2006
Number: 2003-017