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Time Variation in Lifecycle Consumption and Income

Author

Listed:
  • Yunus Aksoy
  • Henrique S. Basso
  • Carolyn St Aubyn

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.

Suggested Citation

  • Yunus Aksoy & Henrique S. Basso & Carolyn St Aubyn, 2020. "Time Variation in Lifecycle Consumption and Income," CESifo Working Paper Series 8162, CESifo.
  • Handle: RePEc:ces:ceswps:_8162
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    More about this item

    Keywords

    age profile of consumption; age profile of income; consumption heterogeneity; time variation; pooling;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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