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Home Research areas Consumer behaviour and indirect taxation Consumption dynamics and inequality

Consumption dynamics and inequality

Our research in this area looks both at how much households save, spend and borrow at different stages in the life cycle, and how these decisions feed into inequalities in consumption both cross-sectionally and dynamically. A greater understanding of how consumers allocate their spending over time can help answer questions about how consumption and saving will respond to changes in household circumstances, as well as the degree to which consumers bring forward or postpone purchases in response to changes in interest rates and taxes.

Selected highlights

Journal article
This paper describes the transmission of income inequality into consumption inequality and in so doing investigates the degree of insurance to income shocks.
Journal article
The authors propose a method to test for liquidity constraints which relies on using the within period marginal rate of substitution condition as a benchmark to evaluate the intertemporal Euler equation.
Journal article
We assess the empirical validity of the life-cycle model using a time series of cross sections and a novel parametrization of preferences.
Journal article
This paper places the debate over using consumption or income in studies of inequality growth in a formal intertemporal setting. It highlights the importance of permanent and transitory income uncertainty in the evaluation of growth in consumption inequality.
Journal article
We develop a new quantile-based panel data framework to study the nature of income persistence and the transmission of income shocks to consumption.
Journal article
In this paper the authors show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in U.S. household-level data.


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Peter Levell
Associate Director
Martin O'Connell
International Research Fellow