In:
Journal of Money, Credit and Banking, Wiley, Vol. 53, No. 6 ( 2021-09), p. 1229-1266
Abstract:
We show that consumption expenditures for older households are more responsive to monetary policy shocks than for young‐ or middle‐aged households. A one‐standard‐deviation expansionary monetary policy shock induces a statistically significant and quantitatively large (1.7%) increase in aggregate consumption for old households over the ensuing 3 years. The responses for young‐ and middle‐aged households are smaller and not statistically significant. We also present evidence, suggesting that life‐cycle wealth effects play a role in driving the responses. We then build the wealth mechanism into a partial equilibrium life‐cycle model, which can qualitatively match the empirical patterns.
Type of Medium:
Online Resource
ISSN:
0022-2879
,
1538-4616
Language:
English
Publisher:
Wiley
Publication Date:
2021
detail.hit.zdb_id:
2010422-4
detail.hit.zdb_id:
218362-6
SSG:
3,2
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