I show that the “consumption variation” approach, commonly used in infinitely lived agent models to measure the welfare impact of a policy, is not accurate in overlapping generations environments. While in an infinitely lived agent environment the consumption variation can be shown to be equivalent to a measure based on the Hicks compensation principle, this is not true in overlapping generatio...

the aim of this research is to analyse of empirical relationship of fiscal policy and iranian trade account in the years 1338-1385(1959-2006). in and econometrics model the methods of engle and granger (1987), johansen (1988), ardl, pessaran and shin(1998), philips and hansen(1990), have been used to find out the effects of variables such as government expenditures(the component of public deman...

We develop a behavioral axiomatic characterization of exponentially discounted utility (EDU) over consumption streams. Given is an individual agent’s behavior in the market: assume a finite collection of purchases across periods. We show that such behavior satisfies a “revealed preference axiom” if and only if there exists a EDU model (a discount rate per period and a concave utility function o...

This paper presents the partial analytical solution to a model of periodic consumption that incorporates imperfect capital markets and uncertainty. Our model assumes that consumption decisions occur more frequently than income receipt. We show that the week specific consumption functions can be ordered. At low levels of wealth these functions exhibit a “ushaped” pattern between income receipts....

The aim of this paper is to evaluate the impact of a wage increase on Qat consumption for the Djiboutian mail household head using a static framework. In particular, by using a system of simultaneous of equations with Qat consumption and Wage as endogenous variables, the paper estimates whether a wage increase will affect Qat consumption. Our findings suggest that the impact of wage on Qat cons...

This paper attempts to detect the existence of links in consumption preferences between generations. Preferences for consumption goods may be determined by the preferences of parents (vertical transmission) and/or by preferences arising from the environment (horizontal transmission). We propose an indirect methodology to overcome the lack of data on consumption choices of dynasties, i.e., paren...

We analyze a game theoretic model of social learning about a consumption good with endogenous timing and heterogeneous accuracy of private information. We show that if individuals value their reputation for the degree to which they are informed, this reduces the incentive to learn by observing others and exacerbates the incentive to consume the good before others, i.e., to attempt to be an “opi...

Rational junk-food consumption is analyzed within an expected lifetime utility maximizing framework in which longevity and productivity rise with health, and health deteriorates with junk-food consumption. As long as the junk food’s relative taste-price differential is positive, the consumer’s rational diet deviates from the physiologically optimal one and generates lower than maximal levels of...

Exploiting three Italian earthquakes as quasi-experiments, we analyze the response of homeowners’ consumption to transfers targeted to finance housing reconstruction over time—which, like loans, mainly affect the liquidity of households’ wealth in the short run. We show that transfers that have no effect on consumption over a multi-year horizon, can have significant heterogeneous effects on imp...