E21 - Consumption; Saving; Wealth

• The Welfare Cost of Inflation Revisited: The Role of Financial Innovation and Household Heterogeneity

  Staff Working Paper 2018-40 Shutao Cao, Césaire Meh, José-Víctor Ríos-Rull, Yaz Terajima

  We document that, across households, the money consumption ratio increases with age and decreases with consumption, and that there has been a large increase in the money consumption ratio during the recent era of very low interest rates. We construct an overlapping generations (OLG) model of money holdings for transaction purposes subject to age (older households use more money), cohort (younger generations are exposed to better transaction technology), and time effects (nominal interest rates affect money holdings).

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation: costs and benefits JEL Code(s): E, E2, E21, E4, E41

• Reconciling Jaimovich-Rebelo Preferences, Habit in Consumption and Labor Supply

  Staff Working Paper 2018-26 Tom D. Holden, Paul Levine, Jonathan Swarbrick

  This note studies a form of a utility function of consumption with habit and leisure that (a) is compatible with long-run balanced growth, (b) hits a steady-state observed target for hours worked and (c) is consistent with micro-econometric evidence for the inter-temporal elasticity of substitution and the Frisch elasticity of labor supply.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Labour markets JEL Code(s): E, E2, E21, E24

• Did U.S. Consumers Respond to the 2014–2015 Oil Price Shock? Evidence from the Consumer Expenditure Survey

  Staff Working Paper 2018-13 Patrick Alexander, Louis Poirier

  The impact of oil price shocks on the U.S. economy is a topic of considerable debate. In this paper, we examine the response of U.S. consumers to the 2014–2015 negative oil price shock using representative survey data from the Consumer Expenditure Survey.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Domestic demand and components, Recent economic and financial developments JEL Code(s): D, D1, D12, E, E2, E21, Q, Q4, Q43

• Can the Common-Factor Hypothesis Explain the Observed Housing Wealth Effect?

  Staff Working Paper 2016-62 Narayan Bulusu, Jefferson Duarte, Carles Vergara-Alert

  The common-factor hypothesis is one possible explanation for the housing wealth effect. Under this hypothesis, house price appreciation is related to changes in consumption as long as the available proxies for the common driver of housing and non-housing demand are noisy and housing supply is not perfectly elastic.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Housing JEL Code(s): E, E2, E21, R, R3, R31

• Capital Flows to Developing Countries: Is There an Allocation Puzzle?

  Staff Working Paper 2016-53 Josef Schroth

  Foreign direct investment inflows are positively related to growth across developing countries—but so are savings in excess of investment. I develop an explanation for this well-established puzzle by focusing on the limited availability of consumer credit in developing countries together with general equilibrium effects.

  Content Type(s): Staff research, Staff working papers Topic(s): Foreign reserves management, Interest rates, International financial markets JEL Code(s): E, E1, E13, E2, E21, F, F4, F43

• Global Macro Risks in Currency Excess Returns

  Staff Working Paper 2016-32 Kimberly Berg, Nelson C. Mark

  We study a cross section of carry-trade-generated currency excess returns in terms of their exposure to global fundamental macroeconomic risk.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Exchange rates, Interest rates JEL Code(s): E, E2, E21, E4, E43, F, F3, F31, G, G1, G12

• Housing and Tax-Deferred Retirement Accounts

  Staff Working Paper 2016-24 Anson T. Y. Ho, Jie Zhou

  Assets in tax-deferred retirement accounts (TDA) and housing are two major components of household portfolios. In this paper, we develop a life-cycle model to examine the interaction between households’ use of TDA and their housing decisions.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Housing JEL Code(s): C, C6, C61, D, D1, D14, D9, D91, E, E2, E21, H, H2, H24, R, R2, R21

• Credit Conditions and Consumption, House Prices and Debt: What Makes Canada Different?

  Staff Working Paper 2015-40 John Muellbauer, Pierre St-Amant, David Williams

  There is widespread agreement that, in the United States, higher house prices raise consumption via collateral or possibly wealth effects. The presence of similar channels in Canada would have important implications for monetary policy transmission.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Domestic demand and components, Economic models, Financial institutions, Financial stability, Financial system regulation and policies, Housing, Monetary policy transmission JEL Code(s): E, E0, E02, E2, E21, E4, E44, G, G2, G21, R, R2, R21, R3, R31

• On the Welfare Cost of Rare Housing Disasters

  Staff Working Paper 2015-26 Shaofeng Xu

  This paper examines the welfare cost of rare housing disasters characterized by large drops in house prices. I construct an overlapping generations general equilibrium model with recursive preferences and housing disaster shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Economic models, Housing JEL Code(s): E, E2, E21, E4, E44, G, G1, G11, R, R2, R21

• Exploring Differences in Household Debt Across Euro Area Countries and the United States

  Staff Working Paper 2015-16 Dimitris Christelis, Michael Ehrmann, Dimitris Georgarakos

  We use internationally comparable household-level data for ten euro area economies and the United States to investigate cross-country differences in debt holdings and the potential of debt overhang.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Econometric and statistical methods, International topics JEL Code(s): D, D1, D12, E, E2, E21, G, G1, G11