Agnes Kovacs: all content

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Permanent versus Transitory Income Shocks over the Business Cycle

Working Paper

This paper investigates how different income shocks shape consumption dynamics over the business cycle. First, we break new ground by creating a unique, panel dataset of transitory and permanent income shocks, using subjective income expectations from the Dutch Household Survey.

1 November 2019

Working paper graphic

Temptation and commitment: understanding the demand for illiquidity

Working Paper

The vast majority of household wealth in the U.S. is held in illiquid assets, primarily housing, making households vulnerable to unexpected income shocks. To rationalize this preference for illiquidity, we build a life-cycle model where households are tempted to consume their liquid wealth but can use illiquid housing as a savings commitment device.

1 July 2019