Publicaciones
WP-AD 2018-06
Life-cycle Wealth Accumulation and Consumption Insurance
Campanale, C. y Sartarelli, M.
Año de publicacion: 2018
Palabras clave: precautionary savings, Epstein-Zin, consumption insurance coefficients, life-cycle
Clasificación JEL: E21
DOI: http://dx.medra.org/10.12842/WPAD-2018-06
Resumen
Households appear to smooth consumption in the face of income shocks much more than implied by life-cycle versions of the standard incomplete market model under reference calibrations. In the current paper we explore in detail the role played by the life-cycle pro¿le of wealth accumulation. We show that a standard model parameterized to match the latter can rationalize between 83 and more than 97 percent of the consumption insurance against permanent earnings shocks empirically estimated by Blundell, Pistaferri and Preston (2008), depending on the tightness of the borrowing limit.