IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper

Deconstructing Life-cycle Consumption with Home Production

  • Fang Yang

    (State University of New York at Albany)

  • Wenli Li

    (Federal Reserve Bank of Philadelphia)

We incorporate home production in a dynamic stochastic general equilibrium model of household consumption and saving with illiquid housing and endogenous collateralized borrowing constraint. We show that such a model is capable of explaining life-cycle patterns of households' time use and their consumption of different categories. Specifically, households' market hours increase initially as households age, then decline sharply. By contrast, households' home hours are much more stable and start to increase only later in life. Households' consumption of market good, home good, and housing services all exhibit hump shape over the life cycle, with market good having the most pronounced hump, followed by home good, and then housing services. A plausibly parameterized version of our model predicts that the interaction of labor efficiency profile and the availability of pension fund explain households' time use over the life cycle. The resulting income profile as well as endogenous borrowing constraints account for the initial humps in all three consumption goods. The consumption profiles in second half of the life cycle are mostly driven by the complementarity of home hours, home good, and housing in home production.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://economicdynamics.org/meetpapers/2009/paper_670.pdf
Download Restriction: no

Paper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 670.

as
in new window

Length:
Date of creation: 2009
Date of revision:
Handle: RePEc:red:sed009:670
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:red:sed009:670. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.