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Asymmetric Consumption Effects of Transitory Income Shocks

Author

Listed:
  • Dimitris Christelis
  • Dimitris Georgarakos
  • Tullio Jappelli
  • Luigi Pistaferri
  • Maarten van Rooij

Abstract

We use the responses of a representative sample of Dutch households to survey questions that ask how much their consumption would change in response to unexpected, transitory income shocks (positive or negative). The questionnaire also distinguishes between relatively small income changes (a one-month increase or drop in income), and relatively larger ones (equal to three-months' income). The results are broadly in line with models of intertemporal choice with precautionary saving, borrowing constraints and finite horizons.

Suggested Citation

  • Dimitris Christelis & Dimitris Georgarakos & Tullio Jappelli & Luigi Pistaferri & Maarten van Rooij, 2019. "Asymmetric Consumption Effects of Transitory Income Shocks," The Economic Journal, Royal Economic Society, vol. 129(622), pages 2322-2341.
    • Handle: RePEc:oup:econjl:v:129:y:2019:i:622:p:2322-2341.
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    File URL: http://hdl.handle.net/10.1093/ej/uez013
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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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