A Benchmark Buffer Stock Model of Consumption and Income Dynamics
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pages
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Model (Carroll (1992)+Aggregate Shocks)
Summary
References
A Benchmark Bu er Stock Model
of Consumption and Income Dynamics
Chris Carroll
Johns Hopkins University
JEDC Conference, Aug 31/Sep 1
Carroll A Benchmark of Consumption and Income Dynamics Model (Carroll (1992)+Aggregate Shocks) Carroll (1992)
Summary Income Process
References 9 F(p)
Main di erence with Aiyagari (1994) is income process
Aiyagari: Stationary Order 1 Markov transition matrix
Carroll :
Friedman (1957)/Muth (1960)
Transitory and Permanent shocks
Lillard and Weis (1979), MaCurdy (1982), Abowd and Card
(1989), etc etc
Carroll: Works well for household income in PSID
Virtues:
2 parameters, very simple, corresponds to theory, easy to
understand
Being serious about microfoundations of macro means being
serious about micro data
Caveat: all 2 parmaeter models can be rejected with 10000
datapoints
Carroll A Benchmark of Consumption and Income Dynamics Model (Carroll (1992)+Aggregate Shocks) Carroll (1992)
Summary Income Process
References 9 F(p)
Main di erence with Aiyagari (1994) is income process
Aiyagari: Stationary Order 1 Markov transition matrix
Carroll :
Friedman (1957)/Muth (1960)
Transitory and Permanent shocks
Lillard and Weis (1979), MaCurdy (1982), Abowd and Card
(1989), etc etc
Carroll: Works well for household income in PSID
Virtues:
2 parameters, very simple, corresponds to theory, easy to
understand
Being serious about microfoundations of macro means being
serious about micro data
Caveat: all ...
Voir
Summary
References
A Benchmark Bu er Stock Model
of Consumption and Income Dynamics
Chris Carroll
Johns Hopkins University
JEDC Conference, Aug 31/Sep 1
Carroll A Benchmark of Consumption and Income Dynamics Model (Carroll (1992)+Aggregate Shocks) Carroll (1992)
Summary Income Process
References 9 F(p)
Main di erence with Aiyagari (1994) is income process
Aiyagari: Stationary Order 1 Markov transition matrix
Carroll :
Friedman (1957)/Muth (1960)
Transitory and Permanent shocks
Lillard and Weis (1979), MaCurdy (1982), Abowd and Card
(1989), etc etc
Carroll: Works well for household income in PSID
Virtues:
2 parameters, very simple, corresponds to theory, easy to
understand
Being serious about microfoundations of macro means being
serious about micro data
Caveat: all 2 parmaeter models can be rejected with 10000
datapoints
Carroll A Benchmark of Consumption and Income Dynamics Model (Carroll (1992)+Aggregate Shocks) Carroll (1992)
Summary Income Process
References 9 F(p)
Main di erence with Aiyagari (1994) is income process
Aiyagari: Stationary Order 1 Markov transition matrix
Carroll :
Friedman (1957)/Muth (1960)
Transitory and Permanent shocks
Lillard and Weis (1979), MaCurdy (1982), Abowd and Card
(1989), etc etc
Carroll: Works well for household income in PSID
Virtues:
2 parameters, very simple, corresponds to theory, easy to
understand
Being serious about microfoundations of macro means being
serious about micro data
Caveat: all ...
A Benchmark Buffer Stock Modelof Consumption and Income Dynamics
Chris CarrollJohns Hopkins University
JEDC Conference, Aug 31/Sep 1
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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Main difference with Aiyagari (1994) is income processAiyagari: Stationary Order 1 Markov transition matrixCarroll :Friedman (1957)/Muth (1960)Transitory and Permanent shocksLillard and Weis (1979), MaCurdy (1982), Abowd and Card(1989), etc etcCarroll: Works well forhouseholdincome in PSIDVirtues:2 parameters, very simple, corresponds to theory, easy tounderstandBeing serious about microfoundations of macro means beingserious about micro dataCaveat:all2 parmaeter models can be rejected with 10000datapoints
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