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Journal Article
Restoring confidence and growth
Siems, Thomas F. (2013)
Financial Insights , Volume 2 , Issue 2 , Pages 1-3

Working Paper
Welfare Evaluation in a Heterogeneous Agent Model: How Representative is the CES Representative Consumer?
Tito, Maria D. (2015-12-02)
The present paper investigates the impact of asymmetric price changes on welfare in a model with heterogeneous consumers. I consider consumer heterogeneity a la Anderson et al. (1992). The standard welfare equivalence between the CES representative consumer and the discrete choice model breaks down in presence of asymmetric price changes. In fact, asymmetric variation in prices produce differential gains among heterogeneous consumers. I show that there exists no feasible Kaldor-Hicks income transfer such that the gains are equally redistributed. Intuitively, in presence of decreasing marginal ...
Finance and Economics Discussion Series , Paper 2015-109

Working Paper
Rationally Inattentive Savers and Monetary Policy Changes: A Laboratory Experiment
Civelli, Andrea; Deck, Cary; Tutino, Antonella (2019-12-19)
We present a model where rationally inattentive agents decide how much to save while imperfectly tracking interest rate changes. Suitable assumptions on agents’ preferences and interest rate distribution allow us to derive testable theoretical predictions and their implications for monetary policy. We probe these predictions using a laboratory experiment with induced inattention that closely reflects the theoretical assumptions. We find that, empirically, the laboratory data corroborates the results of the theoretical model. In particular, we show that experimental subjects respond to ...
Working Papers , Paper 1915

Working Paper
Bundling Time and Goods: Implications for Hours Dispersion
Fang, Lei; Silos, Pedro; Hannusch, Anne (2020-01-01)
We document the large dispersion in hours worked in the cross-section. We account for this fact using a model in which households combine market inputs and time to produce a set of nonmarket activities. To estimate the model, we create a novel data set that pairs market expenditures and time use at the activity level using data from the Consumer Expenditure Survey and the American Time Use Survey, respectively. The estimated model can account for a large fraction of the dispersion of hours worked in the data. The substitutability between market inputs and time within an activity and across a ...
FRB Atlanta Working Paper , Paper 2020-1

Working Paper
Scarcity and Intertemporal Choice
Sharma, Eesha; Tully, Stephanie; Wang, Xiang (2022-09-01)
Scarcity is a ubiquitous experience, and existing evidence largely suggests that people become more myopic when they feel their resources are scarce. Importantly, evidence for this proposition comes primarily from contexts in which scarcity threatens needs that require resources imminently. The current work examines instances in which scarcity threatens needs along a broader time horizon. Archival data from the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute and five pre-registered studies (N = 7,728) show that the time horizon of threatened needs is an important ...
Working Papers , Paper 22-27

Discussion Paper
Mortgage Lock‑In Spurs Recent HELOC Demand
Haughwout, Andrew F.; Lee, Donghoon; Mangrum, Daniel; Scally, Joelle; Van der Klaauw, Wilbert (2024-08-06)
Mortgage balances, the largest component of U.S. household debt, grew by only $77 billion (0.6 percent) in the second quarter of 2024, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. This modest increase reflects a substantial slowdown in mortgage origination; only $374 billion was originated during the second quarter, compared to an average of about $1 trillion per quarter between 2021 and 2022. Meanwhile, after nearly thirteen years of decline, balances on home equity lines of credit (HELOC) have begun to ...
Liberty Street Economics , Paper 20240806

Working Paper
Why Does Consumption Fluctuate in Old Age and How Should the Government Insure it?
De Nardi, Mariacristina; Borella, Margherita; Blundell, Richard; Commault, Jeanne (2020-10-23)
In old age, consumption can fluctuate because of shocks to available resources and because health shocks affect utility from consumption. We find that even temporary drops in income and health are associated with drops in consumption and most of the effect of temporary drops in health on consumption stems from the reduction in the marginal utility from consumption that they generate. More precisely, after a health shock, richer households adjust their consumption of luxury goods because their utility of consuming them changes. Poorer households, instead, adjust both their necessary and luxury ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 40

Working Paper
Luxuries, Necessities, and the Allocation of Time
Fang, Lei; Hannusch, Anne; Silos, Pedro (2021-12-28)
Households enjoy utility from activities that require a combination of time and goods. We classify activities into two types: luxuries and necessities. Luxuries (necessities) are activities for which time and expenditure shares rise (decline) with income. We develop and estimate a model with nonhomothetic preferences and find that time and goods are substitutable in producing activities. Activities are also substitutable among themselves. Hence, wage and price changes cause large reallocations of time and expenditures across activities. This effect is quantitatively important for welfare ...
FRB Atlanta Working Paper , Paper 2021-28

Working Paper
Continuous Markov equilibria with quasi-geometric discounting
Eyigungor, Burcu; Chatterjee, Satyajit (2014-02-27)
We prove that the standard quasi-geometric discounting model used in dynamic consumer theory and political economics does not possess continuous Markov perfect equilibria (MPE) if there is a strictly positive lower bound on wealth. We also show that, at points of discontinuity, the decision maker strictly prefers lotteries over the next period's assets. We then extend the standard model to have lotteries and establish the existence of an MPE with continuous decision rules. The models with and without lotteries are numerically compared, and it is shown that the model with lotteries behaves ...
Working Papers , Paper 14-6

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