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A leisurely reading of the life-cycle consumption data

  • James B. Bullard
  • James Feigenbaum

A puzzle in consumption theory is the observation of a hump in age-consumption profiles. We study a general equilibrium life-cycle economy with capital in which households include both consumption and leisure in their period utility function. We calibrate the model and find that a significant hump in life-cycle consumption is a feature of the equilibrium. Thus inclusion of leisure in household preferences may provide part of the explanation of observed life-cycle consumption humps.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2003-017.

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Date of creation: 2006
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Handle: RePEc:fip:fedlwp:2003-017
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