Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy
Attanasio, Orazio P., and
Guglielmo Weber. 2010. "Consumption and Saving: Models of Intertemporal Allocation and Their Implications for Public Policy."
Journal of Economic Literature,
This paper provides a critical survey of the large literature on the life cycle model of consumption, both from an empirical and a theoretical point of view. It discusses several approaches that have been taken in the literature to bring the model to the data, their empirical successes, and their failures. Finally, the paper reviews a number of changes to the standard life cycle model that could help solve the remaining empirical puzzles.
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Attanasio, Orazio P. (U College London and IFS, London)
Weber, Guglielmo (U Padova and IFS, London)
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
E21: Macroeconomics: Consumption; Saving; Wealth