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Topic: Intertemporal consumption

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	AUSTRIAN CAPITAL THEORY / FUTURE OF MACROECONOMICS
		Explicit attention to the capital structure and its relationship to intertemporal consumption preferences provides a unification of theories that is absent in the more conventional formulations in which capital considerations remain suppressed.
		In broad application, income-induced consumption demand lies on one side of the distinction while the other side consists of so-called autonomous consumption demand, as well as investment demand and government spending, both of which are taken to be autonomous in that they do not depend in any direct or fundamental way upon current income.
		In practice, the first component, autonomous consumption demand, remains virtually constant; the second component, investment demand, changes erratically on the basis of the changing psychology of the business community; and the third component, government spending, can be varied by policymakers so as to induce changes in income.
	www.auburn.edu /~garriro/b4mismac.htm (5680 words)

	Intertemporal consumption - Wikipedia, the free encyclopedia
		Economic theories of intertemporal consumption seek to explain people's preferences in relation to consumption and saving over the course of their life.
		Thus, the lifetime consumption profile was expected to be essentially flat, with people borrowing against future earnings during their early study and working life when income is low, saving greatly during their most productive working years and consuming saved assets during retirement.
		Drawing upon empirical studies of consumption, superannuation and windfall gains they hypothesize that the MPC is close to one out of current income, close to zero for future income and somewhere in between with respect to current assets.
	en.wikipedia.org /wiki/Intertemporal_consumption (519 words)

	St. Louis Fed: WP 1995-002C "Risk Aversion Versus Intertemporal Substitution: A Case Study of Identification Failure in ...
		Is the risk aversion parameter in the simple intertemporal consumption CAPM "small" as in Hansen and Singleton (1982,1983), or is it that its reciprocal, the intertemporal elasticity of substitution, is small, as in Hall (1988)?
		That is, the disparate estimates reflect near nonidentification due to the unpredictability of asset returns and consumption growth.
		An equally natural identifying restriction from the intertemporal substitution perspective leads to estimates of the reciprocal that are also low and stable.
	research.stlouisfed.org /wp/more/1995-002 (180 words)

	Incomplete Intertemporal Consumption Smoothing and Incomplete Risksharing ewp-if/0506010 (Site not responding. Last check: 2007-11-04)
		This paper develops a method to estimate jointly the degree of (possibly incomplete) intertemporal consumption smoothing and the degree of (possibly incomplete) international/interregional risksharing.
		This approach generalizes and improves upon studies that either examine only intertemporal consumption smoothing, or analyze risksharing by making an extreme assumption on intertemporal consumption smoothing, or by adopting a purely empirical framework.
		The empirical results suggest that: 1) regardless of the assumption on the degree of intertemporal consumption smoothing, the degree of risksharing within a country is larger than across countries 2) the degree of intertemporal consumption smoothing within a country is also larger than across countries, contrary to the findings of past channel studies.
	econwpa.wustl.edu /eprints/if/papers/0506/0506010.abs (473 words)

	[No title]
		The analysis presented here is analogous to that in Chapter 5; instead of choosing between consumption of goods at any point in time, the analysis focuses on a one good world where the choice at a point in time is between future and present consumption.
		Analysis of the gains from intertemporal trade, the size of borrowing and lending, and the effects of taxes on capital transfers follow.
		Substitute "future consumption" and "present consumption" for "cloth" and "food." The relevant relative price is the cost of future consumption compared to present consumption, which is the inverse of the real interest rate.
	www.sbe.csuhayward.edu /~lkahane/MHC/imch07.doc (1457 words)

	THE INTERTEMPORAL ADAM SMITH
		But the intertemporal allocations under a system of natural liberty was in conflict with his own vision of economic growth.
		Smith saw his intertemporal bias as "entirely different" from the interspatial bias of the Mercantilists, but his economics of time is closely analogous to their economics of space.
		Another aspect of the modern intertemporal, or pro-growth, bias is found, most commonly in principles-level texts, in the curious treatment of compounding.
	www.auburn.edu /~garriro/d7smith.htm (4326 words)

	Optimal Intertemporal Consumption Under Uncertainty
		We analyze the optimal consumption program of an infinitely-lived consumer who maximizes the discounted sum of utilities subject to a sequence of budget constraints where both the interest rate and his income are stochastic.
		We show that if the income and interest rate processes are sufficiently stochastic and the long run average rate of interest is greater than or equal to the discount rate, then consumption eventually grows without bound with probability one.
		We also establish conditions under which the borrowing constraints must be binding and examine how the income process affects the optimal consumption program.
	ideas.repec.org /a/red/issued/v3y2000i3p365-395.html (608 words)

	Hypothetical intertemporal consumption choices
		Furthermore, we estimate structural models of intertemporal choice, while parameterizing the parameters of interest as a function of relevant individual characteristics.
		Models with habit formation appear to be superior to models with intertemporally additive preferences.
		"The consumption of stockholders and nonstockholders," Journal of Financial Economics, Elsevier, vol.
	ideas.repec.org /p/dgr/kubcen/200131.html (593 words)

	Pistaferri, Luigi: Intertemporal Choice and Consumption Mobility (Site not responding. Last check: 2007-11-04)
		We test the validity of three models of intertemporal consumption choice(the permanent income hypothesis, the myopic model, and the consumption insurance model) by means of mobility indexes for the underlying consumption distribution.
		Estimating the transition laws requires knowledge of the evolution of the entire consumption distribution, not just of the conditional mean of consumption growth as in more standard procedures.
		The comparison rejects the theory of consumption insurance and the myopic model and is favorable to the permanent income hypothesis once we allow for measurement error in consumption.
	www.nuff.ox.ac.uk /users/doornik/eswc2000/a/0118.html (176 words)

	CiteULike: Substitution, Risk Aversion, and the Temporal Behavior of Consumption and Asset Returns: A Theoretical ... (Site not responding. Last check: 2007-11-04)
		In our general model, systematic risk of an asset is determined by covariance with both the return to the market portfolio and consumption growth, while in each of the existing models only one of these factors plays a role.
		This result is achieved despite the homotheticity of preferences and the separability of consumption and portfolio decisions.
		Two other auxiliary analytical contributions which are of independent interest are the proofs of (i) the existence of recursive intertemporal utility functions, and (ii) the existence of optima to corresponding optimization problems.
	www.citeulike.org /user/toomash/article/158394 (540 words)

	SAS/ETS Examples -- Estimating a Consumption-Based Asset Pricing Model
		To perform the estimation requires data on some measure of consumption, returns for the assets of interest, and instruments from the public's information set.
		Seasonally adjusted nondurables deflated by seasonally adjusted personal consumption deflators are used as the measure of consumption; the four assets used are the real returns from government and corporate bonds and the smallest and largest equity decile real returns.
		These estimates are the same values reported by Ferson and Harvey (1992) in Panel B of Table IV in their paper, a four asset system with seasonally adjusted nondurables as the consumption measure.
	support.sas.com /rnd/app/examples/ets/harvey/index.htm (1461 words)

	SSRN-Intertemporal Choice and Consumption Mobility by Tullio Jappelli, Luigi Pistaferri
		The theory of intertemporal consumption choice makes sharp predictions about the evolution of the entire distribution of household consumption, not just about its conditional mean.
		In the paper, we study the empirical transition matrix of consumption using a panel drawn from the Bank of Italy Survey of Household Income and Wealth.
		We estimate the parameters that minimize the distance between the empirical and the theoretical transition matrix of the consumption distribution.
	papers.ssrn.com /Sol3/papers.cfm?abstract_id=871645 (248 words)

	EconPapers: Intertemporal consumption, durables and liquidity constraints: a cohort analysis
		EconPapers: Intertemporal consumption, durables and liquidity constraints: a cohort analysis
		Intertemporal consumption, durables and liquidity constraints: a cohort analysis
		Journal Article: Intertemporal consumption, durables and liquidity constraints: A cohort analysis (1997)
	econpapers.repec.org /paper/ifsifsewp/93_2F07.htm (167 words)

	Intertemporal Consumption Choices, Transaction Costs and Limited Participation to Financial Markets: Reconciling Data ...
		This paper builds a unifying framework that, within the theory of intertemporal consumption choices, brings together the limited participation -based explanation of the poor empirical performance of the C-CAPM and the transaction costs-based explanation of incomplete portfolios.
		Using the implications of the consumption model and observed household consumption and portfolio choices, we identify the preference parameters of interest and a lower bound for the costs rationalizing non-participation in financial markets, in the presence of unobserved heterogeneity in tastes for consumption and portfolio allocation.
		Our estimate of the preference parameter is theoretically plausible and the bound sufficiently small to be likely to be exceeded by the actual total (observable and unobservable) costs of participating to financial markets.
	ideas.repec.org /p/nbr/nberwo/12412.html (619 words)

	Intertemporal (Site not responding. Last check: 2007-11-04)
		Intertemporal correlation aversion is an intuitive concept indicating whether an individual prefers lotteries concerning consumption at different
		Revisiting Treynor and Black (1973): an Intertemporal Model of Active Portfolio Management (2002) Jaksa Cvitanic, Ali Lazrak, Lionel...
		This paper describes a linear programming model to optimise variety structure over time for a pipfruit orchard subject to constraints of...
	www.intertemporal.info (314 words)

	Intertemporal Consumption Choice with an Exogenous Interest Rate (Site not responding. Last check: 2007-11-04)
		Intertemporal Consumption Choice with an Exogenous Interest Rate
		$title Intertemporal Consumption Choice with an Exogenous Interest Rate $ontext This program is a reply to the following question: > I am an MA student in economics, finalizing my dissertation soon.
		representative agent * The consumption activities transform wealth * into consumption over the life cycle: $prod:c(t) o:p(t) q:1 i:p0 q:pv(t) * The demand function is CES over the lifecycle.
	www.mpsge.org /lib/lifecycle.htm (312 words)

	EconPapers: Intertemporal choice and consumption mobility
		Abstract: The theory of intertemporal consumption choice makes sharp predictions about the evolution of the entire distribution of household consumption, not just about its conditional mean.
		In a first step, we study the empirical transition matrix of consumption using a panel drawn from the Bank of Italy Survey of Household Income and Wealth.
		In a second step, we estimate the parameters that minimize the distance between the empirical and the theoretical transition matrix of the consumption distribution.
	econpapers.repec.org /paper/redsed004/195.htm (294 words)

	SSRN-A Note on Robustness in Merton's Model of Intertemporal Consumption and Portfolio Choice by Paolo Vanini, Fabio ...
		The paper presents a robust version of a simple two-assets Merton (1969, Review of Economics and Statistics 51, 247—57) model where the optimal choices and the implied shadow market prices of risk for a representative robust decision maker (RDM) can be easily described.
		With the exception of the log-utility case, precautionary behaviour is induced in the optimal consumption-investment rules through a substitution of investment in risky assets with both current consumption and riskless saving.
		On the financial side, the decomposition of the market price of risk in a standard consumption based component and a further price for model uncertainty risk (which is positively related to the robustness parameter) is independent of the underlying risk aversion parameter.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=382560 (278 words)

	Behavioral finance (Site not responding. Last check: 2007-11-04)
		A number of factors contributed to the resurgence of its use and the development of behavioral economics.
		Expected utility and discounted utility models began to gain wide acceptance which generated testable hypotheses about decision making under uncertainty and intertemporal consumption respectively, and a number of observed and repeatable anomalies challenged these hypotheses.
		Furthermore, during the 1960s cognitive psychology began to describe the brain as an information processing device (in contrast to behaviorist models).
	behavioral-finance.iqnaut.net (1544 words)

	[No title]
		Let c1 and c2 be consumptions in periods 1 and 2.
		Let p1 and p2 be the prices of consumption in periods 1 and 2.
		So the largest possible period 1 consumption level is¡ºçÿ-çÿçÿ çÿçÿçÿ çÿ6ón¨#The Intertemporal Budget Constraintª¨¹Only $m2 will be available in period 2 to pay back $b1 borrowed in period 1.
	www.mtholyoke.edu /~mirobins/econ212/Ch10.ppt (915 words)

	Incomplete Intertemporal Consumption Smoothing and Incomplete Risksharing
		"Intertemporal Substitution in Macroeconomics," The Quarterly Journal of Economics, MIT Press, vol.
		"Consumption and Aggregate Constraints: Evidence from U.S. States and Canadian Provinces," Journal of Political Economy, University of Chicago Press, vol.
		"International Consumption Risk Sharing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol.
	ideas.repec.org /p/wpa/wuwpif/0506010.html (1203 words)

	[No title] (Site not responding. Last check: 2007-11-04)
		The price of money is the interest rate.óF#¨(3.2 Making Consumption Choices over Time¡))#¨ïAn individual can alter his consumption across time periods through borrowing and lending.
		We can illustrate this by graphing consumption today versus consumption in the future.
		Logistically, separating investment decision making from the shareholders is a basic requirement of the modern corporation.óT1¨3.8 Summary and Conclusions¨@Financial markets exist because people want to adjust their consumption over time.
	www.cba.uh.edu /finance/lecturers/SC-Lecture2.ppt (814 words)

	[No title]
		Consumption and Market Risks of Corporate Cash Flows¡99(¨ óeV¨8Remember the Discounted Cash Flow Approach to Valuation?¡99(¨ZWe teach our students to value an asset by discounting expected cash flows at their proper risk-adjusted discount rates.
		Consumption relates to each of these through effects of wealth, the term structure, and relation of credit risk to the economic cycle, respectively.¡Zª zóì—¨AMaximum Correlation PortfolioSemiannual Data (Dec-Jun) 1960-2004¡BB$óê” ² Consumption Risk and the Cross-Section of Expected Returns, Parker-Julliard (JPE, 2005)¡JZþ
		Vol(Sample Aggregate=6.9%)¡6L=ª,Nó÷¨0Equity Premium Puzzle and Consumption Volatility¨Individual consumption volatility is 5-10 times larger than measured volatility of NIPA aggregate consumption.
	www.fuqua.duke.edu /news/breeden-talk-0805.ppt (619 words)

	Hypothetical Intertemporal Consumption Choices
		"Hypothetical Intertemporal Consumption Choices," Economic Journal, Royal Economic Society, vol.
		"Hypothetical intertemporal consumption choices," Discussion Paper 31, Tilburg University, Center for Economic Research.
		"Solving consumption models with multiplicative habits," Economics Letters, Elsevier, vol.
	ideas.repec.org /p/ecj/ac2002/111.html (562 words)

	[No title]
		In order to give up 1 unit of current consumption the consumer must receive 1.05 units of future consumption.
		In order to increase current consumption by one unit the consumer is willing to give up 1.05 units of future consumption.
		Thus, the establishment of financial markets has been shown to be an important tool for human capital and economic development in developing countries.
	www.caf.wvu.edu /resm/courses/are500/15IntertemporalChoice.doc (571 words)

	Behavioral finance - Wikipedia, the free encyclopedia
		Although not commonly included in discussions of the field of behavioral economics, generalized expected utility theory is similarly motivated by concerns about the descriptive inaccuracy of expected utility theory.
		Behavioral economics has also been applied to problems of intertemporal choice.
		The most prominent idea is that of hyperbolic discounting, in which a high rate of discount is used between the present and the near future, and a lower rate between the near future and the far future.
	en.wikipedia.org /wiki/Behavioral_finance (1900 words)

	NBER Working Papers by Orazio Attanasio (Site not responding. Last check: 2007-11-04)
		w12412 Intertemporal Consumption Choices, Transaction Costs and Limited Participation to Financial Markets: Reconciling Data and Theory
		w6560 Intertemporal Choice and the Cross-Sectional Variance of Marginal Utility
		w4811 The Intertemporal Allocation of Consumption: Theory and Evidence
	www.nber.org /cgi-bin/author_papers.pl?author=orazio_attanasio (176 words)

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