|
Barcelona GSE Working Papers Series
|
 |
|
Barcelona GSE Working Paper No. 646 | | Title: | Consumption Heterogeneity over the Business Cycle | | Authors: | Giacomo de Giorgi, Luca Gambetti | | Date: | 25-06-2012 | | Keywords: | Consumption, Heterogeneity, Aggregate Shocks, Structural Factor Model, FAVAR | | JEL Codes: | E21, E63, D12, C3 | | Abstract: | | We study consumption heterogeneity over the business cycle. Using household panel data from 1984 to 2010 in the US we find that the welfare cost of the business cycle is non-negligible, once agents heterogeneity is taken into account, and sums to about 1% of yearly consumption. This is due to the structure of comovements between the different parts of the consumption distribution, in particular the tails are highly volatile and negatively related to each other. We also find that business cycle fluctuations originating from exogenous financial shocks only hit the top end of the consumption distribution and therefore reduce consumption inequality. | | Download this working paper in PDF format (435.37 Kb) |  List of all recent working papers |
| |
|
|
