Munich Personal RePEc Archive

Revisiting the Effect of Household Size on Consumption Over the Life-Cycle

Bick, Alexander and Choi, Sekyu (2012): Revisiting the Effect of Household Size on Consumption Over the Life-Cycle.

[img]
Preview
PDF
MPRA_paper_41756.pdf

Download (555kB) | Preview

Abstract

Although the link between household size and consumption has a strong empirical support, there is no consistent way in which demographics are dealt with in standard life-cycle models. We study the relationship between the predictions of the Single Agent model (the standard in the literature) versus a simple model extension where deterministic changes in household size and composition affect optimal consumption decisions. We provide theoretical results comparing both approaches and quantify the differences in predictions across models.

Logo of the University Library LMU Munich
MPRA is a RePEc service hosted by
the University Library LMU Munich in Germany.