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Working Paper
How does future income affect current consumption?
Working Paper
On the concavity of the consumption function
Working Paper
The nature and magnitude of precautionary wealth
Working Paper
Saving and growth with habit formation
Working Paper
Saving and growth: a reinterpretation
Working Paper
Buffer stock saving and the permanent income hypothesis
Working Paper
How important is precautionary saving?
Working Paper
Welfare and Spending Effects of Consumption Stimulus Policies
Using a heterogeneous agent model calibrated to match measured spending dynamics over four years following an income shock (Fagereng, Holm, and Natvik (2021)), we assess the effectiveness of three fiscal stimulus policies employed during recent recessions. Unemployment insurance (UI) extensions are the clear “bang for the buck” winner, especially when effectiveness is measured in utility terms. Stimulus checks are second best and have the advantage (over UI) of being scalable to any desired size. A temporary (two-year) cut in the rate of wage taxation is considerably less effective than ...