G2TT
来源类型Discussion paper
规范类型论文
来源IDDP14579
DP14579 Consumption insurance over the business cycle
Tobias Broer
发表日期2020-04-07
出版年2020
语种英语
摘要How do business cycle fluctuations affect the ability of households to smooth consumption against idiosyncratic shocks? To answer this question, we first document that, in U.S.\ micro-data, individual consumption reacts more to income changes in booms. Standard incomplete markets models, in contrast, where individuals borrow and save to smooth consumption, predict a lower sensitivity of consumption to individual income changes during times of high output. This motivates us to consider an alternative environment where financial frictions are endogenous and arise from lack of contract enforcement, whose business cycle properties have so far not been studied. We show analytically that this model is consistent with a wide variety of cyclical patterns of insurance. In a quantitative application with unemployment risk, we show that the response of individual consumption to job losses differs strongly between times of high and low output, and identify the conditions under which it is procyclical, as in the data.
主题Monetary Economics and Fluctuations
关键词Consumption smoothing Risk sharing Limited enforcement Business cycles
URLhttps://cepr.org/publications/dp14579
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/543486
推荐引用方式
GB/T 7714
Tobias Broer. DP14579 Consumption insurance over the business cycle. 2020.
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