Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/23460 
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dc.contributor.authorReis, Ricardoen
dc.date.accessioned2009-01-29T16:07:18Z-
dc.date.available2009-01-29T16:07:18Z-
dc.date.issued2005-
dc.identifier.urihttp://hdl.handle.net/10419/23460-
dc.description.abstractWhile this is typically ignored, the properties of the stochastic process followed by aggregate consumption affect the estimates of the costs of fluctuations. This paper pursues two approaches to modelling aggregate consumption dynamics and to measuring how much society dislikes fluctuations, one statistical and one economic. The statistical approach estimates the properties of consumption and calculates the cost of having consumption fluctuating around its mean growth. The paper finds that the persistence of consumption is a crucial determinant of these costs and that the high persistence in the data severely distorts conventional measures. It shows how to compute valid estimates and confidence intervals. The economic approach uses a calibrated model of optimal consumption and measures the costs of eliminating income shocks. This uncovers a further cost of uncertainty, through its impact on precautionary savings and investment. The two approaches lead to costs of fluctuations that are higher than the common wisdom, between 0.5% and 5% of per capita consumption.en
dc.language.isoengen
dc.publisher|aPrinceton University, Woodrow Wilson School of Public and International Affairs |cPrinceton, NJen
dc.relation.ispartofseries|aDiscussion Papers in Economics |x233en
dc.subject.jelE21en
dc.subject.jelE32en
dc.subject.jelE60en
dc.subject.ddc330en
dc.subject.keywordCosts of fluctuations ; Models of aggregate consumption ; Consumption persistenceen
dc.subject.stwGesamtwirtschaftlicher Konsumen
dc.subject.stwKonsumtheorieen
dc.subject.stwZeitreihenanalyseen
dc.subject.stwKonjunkturen
dc.subject.stwSoziale Kostenen
dc.titleThe time-series properties of aggregate consumption: implications for the costs of fluctuations-
dc.typeWorking Paperen
dc.identifier.ppn50401787Xen
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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