Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216558 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8162
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We document systematic and significant time variation in US lifecycle non-durable consumption profiles. Consumption profiles have consistently become flatter: differences in consumption across generations have decreased. Pooling data across different periods to identify lifecycle profiles masks relevant time variations and may artificially generate hump-shaped consumption age profiles. The main driver behind lifecycle consumption variations are lifecycle income changes, which display similar flattening. Employing a lifecycle model we show changes in income are sufficient to match the movements in consumption. The contributions of credit, housing and interest rates changes are quantitatively small.
Subjects: 
age profile of consumption
age profile of income
consumption heterogeneity
time variation
pooling
JEL: 
E21
J11
Document Type: 
Working Paper
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