Using pseudo-panel data, we estimate the structural parameters of a life—cycle consumption model with discrete labor supply choice. A focus of our analysis is the abrupt drop in consumption upon retirement for a typical household. The literature sometimes refers to the drop, which in the U.S. Consumer Expenditure Survey we estimate to be approximately 14%, as the “retirement—consumption puzzle....

The long-run risks model of asset prices explains stock price variation as a response to persistent ‡uctuations in the mean and volatility of consumption growth, by a representative agent with a high elasticity of intertemporal substitution. This paper documents that the model fails to …t aggregate asset prices in several important ways. The model implies that long-run consumption growth should...

This paper tries to analyze the impacts of intermediate goods trade on production, consumption, investment, net exports, employment, labor wage and capital rent of Iran in its bilateral trade relations with China. This analysis has been done by modeling, solving and calibrating an international real business cycles (IRBC) model in period 1980-2009. The results show that when elasticity of subst...

This paper provides a long-run cycle perspective to explain the behavior of annual flow inheritance. Based on low- and medium frequency properties long time bequests series in Sweden, France, UK, Germany, we explore extent which two-sector Barro-type OLG model is consistent with such empirical regularities. As as agents are sufficiently impatient preferences non-separable, show that endogenous ...

In this paper we assess whether it is changing needs or intertemporal substitution that dominate household expenditure responses to the presence of children over the life-cycle. We construct lifetime expenditure paths for households with different demographic proliles and consider the shape of these paths and some possible implications for welfare measures. Simulated expenditure paths based on ...

We study the impact of housing wealth and individual preferences on demand for annuities long-term care insurance (LTCI). build a multi-state lifecycle model that includes longevity risk health shocks. The preference is represented by recursive utility function separates aversion elasticity intertemporal substitution (EIS). When shocks are considered, higher level lowers annuity demand, while l...

We examine how inputs for health production, in particular, medical care and health-enhancing time, are combined to improve health. The estimated elasticity of substitution from a constant elasticity of substitution production function is significantly less than one for the working-age population, rejecting the unit elasticity of substitution used in previous studies. Copyright © 2016 John Wile...