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| will help MIT open courseware continue |
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| will help MIT open courseware continue |
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| will help MIT open courseware continue |
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| resources for free to make a donation or |
| view additional materials from hundreds |
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| view additional materials from hundreds |
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| view additional materials from hundreds |
| of MIT courses visit mitop courseware at |
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| ocw.mit.edu |
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| okay so today we're going to continue |
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| okay so today we're going to continue |
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| okay so today we're going to continue |
| the topic of uh consumption smoothing I |
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| the topic of uh consumption smoothing I |
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| the topic of uh consumption smoothing I |
| mean this sort of sequence began with |
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| mean this sort of sequence began with |
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| mean this sort of sequence began with |
| the optimal allocation of risk bearing |
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| the optimal allocation of risk bearing |
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| the optimal allocation of risk bearing |
| and what you would see in the |
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| and what you would see in the |
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| and what you would see in the |
| data uh we saw the Benchmark was doing |
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| data uh we saw the Benchmark was doing |
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| data uh we saw the Benchmark was doing |
| well in many but not all cases and there |
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| well in many but not all cases and there |
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| well in many but not all cases and there |
| were some examples |
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| were some examples |
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| were some examples |
| where coefficients on income were higher |
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| where coefficients on income were higher |
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| where coefficients on income were higher |
| and and uh for certain occupations and |
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| and and uh for certain occupations and |
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| and and uh for certain occupations and |
| certain certain types of income |
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| certain certain types of income |
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| certain certain types of income |
| um uh then we took that same Benchmark |
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| um uh then we took that same Benchmark |
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| um uh then we took that same Benchmark |
| still uh clinging to it and uh looked at |
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| still uh clinging to it and uh looked at |
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| still uh clinging to it and uh looked at |
| a whole different kind of data |
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| a whole different kind of data |
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| a whole different kind of data |
| production data and we're going to come |
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| production data and we're going to come |
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| production data and we're going to come |
| back to it next time when we talk about |
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| back to it next time when we talk about |
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| back to it next time when we talk about |
| Labor Supply but while we're on the |
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| Labor Supply but while we're on the |
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| Labor Supply but while we're on the |
| subject of consumption and consumption |
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| subject of consumption and consumption |
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| subject of consumption and consumption |
| smoothing I thought it would be good to |
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| smoothing I thought it would be good to |
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| smoothing I thought it would be good to |
| go some through some alternative models |
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| go some through some alternative models |
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| go some through some alternative models |
| that are widely used and uh and |
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| that are widely used and uh and |
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| that are widely used and uh and |
| different data sets and give you a sense |
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| different data sets and give you a sense |
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| different data sets and give you a sense |
| of uh of what people do in the |
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| of uh of what people do in the |
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| of uh of what people do in the |
| literature um |
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| literature um |
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| literature um |
| so a lot of this has to do with the |
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| so a lot of this has to do with the |
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| so a lot of this has to do with the |
| permanent income model which is kind of |
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| permanent income model which is kind of |
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| permanent income model which is kind of |
| the uh basic sort of thing that people |
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| the uh basic sort of thing that people |
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| the uh basic sort of thing that people |
| rely on and fall back on constantly or |
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| rely on and fall back on constantly or |
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| rely on and fall back on constantly or |
| say consumption smoothing over the life |
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| say consumption smoothing over the life |
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| say consumption smoothing over the life |
| cycle |
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| cycle |
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| cycle |
| um these markets are not complete they |
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| um these markets are not complete they |
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| um these markets are not complete they |
| shut down a lot of the risk |
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| shut down a lot of the risk |
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| shut down a lot of the risk |
| contingencies allowing households to |
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| contingencies allowing households to |
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| contingencies allowing households to |
| trade only in risk-free bonds or maybe |
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| trade only in risk-free bonds or maybe |
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| trade only in risk-free bonds or maybe |
| uh you know have some other savings |
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| uh you know have some other savings |
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| uh you know have some other savings |
| account which cannot go below zero or |
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| account which cannot go below zero or |
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| account which cannot go below zero or |
| limited |
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| limited |
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| limited |
| credit uh the papers we're going to |
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| credit uh the papers we're going to |
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| credit uh the papers we're going to |
| cover first one there's one by Kaplan |
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| cover first one there's one by Kaplan |
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| cover first one there's one by Kaplan |
| and |
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| and |
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| and |
| violante which is going to look at the |
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| violante which is going to look at the |
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| violante which is going to look at the |
| degree of com con assumption through |
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| degree of com con assumption through |
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| degree of com con assumption through |
| smoothing from this Sim which is |
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| smoothing from this Sim which is |
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| smoothing from this Sim which is |
| standard incomplete Market model they're |
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| standard incomplete Market model they're |
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| standard incomplete Market model they're |
| also going to simulate it so |
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| also going to simulate it so |
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| also going to simulate it so |
| that using a two two purposes there uh |
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| that using a two two purposes there uh |
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| that using a two two purposes there uh |
| and we're going to look |
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| and we're going to look |
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| and we're going to look |
| at uh smoothing through the lens of that |
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| at uh smoothing through the lens of that |
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| at uh smoothing through the lens of that |
| model and in the data against permanent |
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| model and in the data against permanent |
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| model and in the data against permanent |
| shocks and transitory shocks this is a |
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| shocks and transitory shocks this is a |
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| shocks and transitory shocks this is a |
| language we have not been using so far |
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| language we have not been using so far |
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| language we have not been using so far |
| uh but it is standard language |
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| uh but it is standard language |
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| uh but it is standard language |
| in this other literature |
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| in this other literature |
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| in this other literature |
| um and look at how smoothing varies |
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| um and look at how smoothing varies |
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| um and look at how smoothing varies |
| against these various shocks varies over |
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| against these various shocks varies over |
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| against these various shocks varies over |
| the life cycle the that the elante paper |
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| the life cycle the that the elante paper |
| |
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| the life cycle the that the elante paper |
| and others draw on this blundel pistar |
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| and others draw on this blundel pistar |
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| and others draw on this blundel pistar |
| and Preston uh method which is looking |
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| and Preston uh method which is looking |
| |
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| and Preston uh method which is looking |
| at consumption and income uh data |
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| at consumption and income uh data |
| |
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| at consumption and income uh data |
| um and in fact there is not typically a |
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| um and in fact there is not typically a |
| |
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| um and in fact there is not typically a |
| very long time series in the US to use |
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| very long time series in the US to use |
| |
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| very long time series in the US to use |
| the best is a PSID which used to only |
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| the best is a PSID which used to only |
| |
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| the best is a PSID which used to only |
| have food so part of this paper is about |
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| have food so part of this paper is about |
| |
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| have food so part of this paper is about |
| how to splice together two different |
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| how to splice together two different |
| |
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| how to splice together two different |
| databases to create a longer panel um |
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| databases to create a longer panel um |
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| databases to create a longer panel um |
| and measure the degree of smoothing in |
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| and measure the degree of smoothing in |
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| and measure the degree of smoothing in |
| the data then we'll move to Deon and |
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| the data then we'll move to Deon and |
| |
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| the data then we'll move to Deon and |
| Paxton which is the same overall topic |
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| Paxton which is the same overall topic |
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| Paxton which is the same overall topic |
| but actually uh quite interesting |
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| but actually uh quite interesting |
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| but actually uh quite interesting |
| because they're going to be looking more |
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| because they're going to be looking more |
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| because they're going to be looking more |
| at |
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| at |
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| at |
| the uh variance of consumption in |
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| the uh variance of consumption in |
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| the uh variance of consumption in |
| cross-sections uh which is an |
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| cross-sections uh which is an |
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| cross-sections uh which is an |
| implication of the models but you don't |
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| implication of the models but you don't |
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| implication of the models but you don't |
| need these panel you just need a bunch |
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| need these panel you just need a bunch |
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| need these panel you just need a bunch |
| of |
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| of |
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| of |
| cross-sections for various years so |
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| cross-sections for various years so |
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| cross-sections for various years so |
| effectively if it's representative you |
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| effectively if it's representative you |
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| effectively if it's representative you |
| can track people by |
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| can track people by |
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| can track people by |
| age um and again they do that through |
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| age um and again they do that through |
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| age um and again they do that through |
| permanent income model a buffer stock |
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| permanent income model a buffer stock |
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| permanent income model a buffer stock |
| model model with borrowing |
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| model model with borrowing |
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| model model with borrowing |
| constraints as well as in the background |
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| constraints as well as in the background |
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| constraints as well as in the background |
| the full insurance model and related to |
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| the full insurance model and related to |
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| the full insurance model and related to |
| things in the |
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| things in the |
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| things in the |
| data then there's this Campbell and Deon |
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| data then there's this Campbell and Deon |
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| data then there's this Campbell and Deon |
| paper uh which is about excess |
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| paper uh which is about excess |
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| paper uh which is about excess |
| smoothness and I kind of smile every |
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| smoothness and I kind of smile every |
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| smoothness and I kind of smile every |
| time I see this |
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| time I see this |
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| time I see this |
| title uh because from the standpoint of |
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| title uh because from the standpoint of |
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| title uh because from the standpoint of |
| the permanent income model you should |
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| the permanent income model you should |
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| the permanent income model you should |
| respond to you know shocks to permanent |
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| respond to you know shocks to permanent |
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| respond to you know shocks to permanent |
| income and uh |
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| income and uh |
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| income and uh |
| and uh and they see in the data that |
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| and uh and they see in the data that |
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| and uh and they see in the data that |
| consumption is smoother than that so |
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| consumption is smoother than that so |
| |
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| consumption is smoother than that so |
| they call it excess smoothness now you |
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| they call it excess smoothness now you |
| |
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| they call it excess smoothness now you |
| know my Smiles come from the fact that |
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| know my Smiles come from the fact that |
| |
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| know my Smiles come from the fact that |
| they haven't considered the full you |
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| they haven't considered the full you |
| |
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| they haven't considered the full you |
| know wrist sharing Benchmark which may |
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| know wrist sharing Benchmark which may |
| |
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| know wrist sharing Benchmark which may |
| not fit perfectly well either but may be |
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| align:start position:0% |
| not fit perfectly well either but may be |
| |
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| not fit perfectly well either but may be |
| part of the explanation in the |
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| align:start position:0% |
| part of the explanation in the |
| |
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| part of the explanation in the |
| background |
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| background |
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| background |
| um and then finally we have this Krueger |
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| um and then finally we have this Krueger |
| |
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| um and then finally we have this Krueger |
| and Parry paper |
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| and Parry paper |
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| and Parry paper |
| which looks at the US and Italian |
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| align:start position:0% |
| which looks at the US and Italian |
| |
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| align:start position:0% |
| which looks at the US and Italian |
| data and I hope we get time to say a few |
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| data and I hope we get time to say a few |
| |
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| data and I hope we get time to say a few |
| words about this today |
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| align:start position:0% |
| words about this today |
| |
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| align:start position:0% |
| words about this today |
| because uh so I'll do this in the |
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| because uh so I'll do this in the |
| |
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| because uh so I'll do this in the |
| recitation oh you're doing it in the |
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| align:start position:0% |
| recitation oh you're doing it in the |
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| align:start position:0% |
| recitation oh you're doing it in the |
| recitation okay uh |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so yeah I originally had this as part of |
|
|
| align:start position:0% |
| so yeah I originally had this as part of |
| |
|
|
| align:start position:0% |
| so yeah I originally had this as part of |
| the primary lecture and then we thought |
|
|
| align:start position:0% |
| the primary lecture and then we thought |
| |
|
|
| align:start position:0% |
| the primary lecture and then we thought |
| there wasn't enough time in class which |
|
|
| align:start position:0% |
| there wasn't enough time in class which |
| |
|
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| align:start position:0% |
| there wasn't enough time in class which |
| may yet turn out to be true and then |
|
|
| align:start position:0% |
| may yet turn out to be true and then |
| |
|
|
| align:start position:0% |
| may yet turn out to be true and then |
| uh I looked at it again and I really |
|
|
| align:start position:0% |
| uh I looked at it again and I really |
| |
|
|
| align:start position:0% |
| uh I looked at it again and I really |
| like it so I'm glad one way or the other |
|
|
| align:start position:0% |
| like it so I'm glad one way or the other |
| |
|
|
| align:start position:0% |
| like it so I'm glad one way or the other |
| you're going to you're going to see it |
|
|
| align:start position:0% |
| you're going to you're going to see it |
| |
|
|
| align:start position:0% |
| you're going to you're going to see it |
| something that's |
|
|
| align:start position:0% |
| something that's |
| |
|
|
| align:start position:0% |
| something that's |
| fine maybe we'll get a lot of |
|
|
| align:start position:0% |
| fine maybe we'll get a lot of |
| |
|
|
| align:start position:0% |
| fine maybe we'll get a lot of |
| questions okay |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so so what's the problem well in the US |
|
|
| align:start position:0% |
| so so what's the problem well in the US |
| |
|
|
| align:start position:0% |
| so so what's the problem well in the US |
| as I was saying we need longitudinal |
|
|
| align:start position:0% |
| as I was saying we need longitudinal |
| |
|
|
| align:start position:0% |
| as I was saying we need longitudinal |
| data on consumption and income and and |
|
|
| align:start position:0% |
| data on consumption and income and and |
| |
|
|
| align:start position:0% |
| data on consumption and income and and |
| uh on consumption we need a |
|
|
| align:start position:0% |
| uh on consumption we need a |
| |
|
|
| align:start position:0% |
| uh on consumption we need a |
| comprehensive |
|
|
| align:start position:0% |
| comprehensive |
| |
|
|
| align:start position:0% |
| comprehensive |
| measure uh you know no one's been |
|
|
| align:start position:0% |
| measure uh you know no one's been |
| |
|
|
| align:start position:0% |
| measure uh you know no one's been |
| Gathering these kinds of data so how do |
|
|
| align:start position:0% |
| Gathering these kinds of data so how do |
| |
|
|
| align:start position:0% |
| Gathering these kinds of data so how do |
| people cope with it they could use the |
|
|
| align:start position:0% |
| people cope with it they could use the |
| |
|
|
| align:start position:0% |
| people cope with it they could use the |
| PS ID and just look at |
|
|
| align:start position:0% |
| PS ID and just look at |
| |
|
|
| align:start position:0% |
| PS ID and just look at |
| Food |
|
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| align:start position:0% |
| Food |
| |
|
|
| align:start position:0% |
| Food |
| uh or they could look exclusively at the |
|
|
| align:start position:0% |
| uh or they could look exclusively at the |
| |
|
|
| align:start position:0% |
| uh or they could look exclusively at the |
| consumer expenditure survey which has a |
|
|
| align:start position:0% |
| consumer expenditure survey which has a |
| |
|
|
| align:start position:0% |
| consumer expenditure survey which has a |
| whole bunch of line items but people are |
|
|
| align:start position:0% |
| whole bunch of line items but people are |
| |
|
|
| align:start position:0% |
| whole bunch of line items but people are |
| not in that sample for more than 3 or |
|
|
| align:start position:0% |
| not in that sample for more than 3 or |
| |
|
|
| align:start position:0% |
| not in that sample for more than 3 or |
| four quarters ERS uh and uh or you could |
|
|
| align:start position:0% |
| four quarters ERS uh and uh or you could |
| |
|
|
| align:start position:0% |
| four quarters ERS uh and uh or you could |
| sort of basically create these sythetic |
|
|
| align:start position:0% |
| sort of basically create these sythetic |
| |
|
|
| align:start position:0% |
| sort of basically create these sythetic |
| cohorts uh by sort of extrapolating and |
|
|
| align:start position:0% |
| cohorts uh by sort of extrapolating and |
| |
|
|
| align:start position:0% |
| cohorts uh by sort of extrapolating and |
| merging uh which is increasingly common |
|
|
| align:start position:0% |
| merging uh which is increasingly common |
| |
|
|
| align:start position:0% |
| merging uh which is increasingly common |
| way to deal with a |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| problem another way to sort of think |
|
|
| align:start position:0% |
| problem another way to sort of think |
| |
|
|
| align:start position:0% |
| problem another way to sort of think |
| about this up front is uh |
|
|
| align:start position:0% |
| about this up front is uh |
| |
|
|
| align:start position:0% |
| about this up front is uh |
| the these models are making a |
|
|
| align:start position:0% |
| the these models are making a |
| |
|
|
| align:start position:0% |
| the these models are making a |
| distinction between permanent and |
|
|
| align:start position:0% |
| distinction between permanent and |
| |
|
|
| align:start position:0% |
| distinction between permanent and |
| transitory shocks but we only see income |
|
|
| align:start position:0% |
| transitory shocks but we only see income |
| |
|
|
| align:start position:0% |
| transitory shocks but we only see income |
| we don't see each of these different |
|
|
| align:start position:0% |
| we don't see each of these different |
| |
|
|
| align:start position:0% |
| we don't see each of these different |
| kinds of shocks |
|
|
| align:start position:0% |
| kinds of shocks |
| |
|
|
| align:start position:0% |
| kinds of shocks |
| individually so what to do about that |
|
|
| align:start position:0% |
| individually so what to do about that |
| |
|
|
| align:start position:0% |
| individually so what to do about that |
| well you could ignore it and just look |
|
|
| align:start position:0% |
| well you could ignore it and just look |
| |
|
|
| align:start position:0% |
| well you could ignore it and just look |
| at the response to total income change |
|
|
| align:start position:0% |
| at the response to total income change |
| |
|
|
| align:start position:0% |
| at the response to total income change |
| which is kind of what we've been doing |
|
|
| align:start position:0% |
| which is kind of what we've been doing |
| |
|
|
| align:start position:0% |
| which is kind of what we've been doing |
| actually in the development uh data |
|
|
| align:start position:0% |
| actually in the development uh data |
| |
|
|
| align:start position:0% |
| actually in the development uh data |
| sets uh you could use |
|
|
| align:start position:0% |
| sets uh you could use |
| |
|
|
| align:start position:0% |
| sets uh you could use |
| proxies for permanent versus transitory |
|
|
| align:start position:0% |
| proxies for permanent versus transitory |
| |
|
|
| align:start position:0% |
| proxies for permanent versus transitory |
| shocks for example disability might |
|
|
| align:start position:0% |
| shocks for example disability might |
| |
|
|
| align:start position:0% |
| shocks for example disability might |
| rightly be thought of as a rather |
|
|
| align:start position:0% |
| rightly be thought of as a rather |
| |
|
|
| align:start position:0% |
| rightly be thought of as a rather |
| permanent shock uh short-term |
|
|
| align:start position:0% |
| permanent shock uh short-term |
| |
|
|
| align:start position:0% |
| permanent shock uh short-term |
| unemployment might be thought of as a |
|
|
| align:start position:0% |
| unemployment might be thought of as a |
| |
|
|
| align:start position:0% |
| unemployment might be thought of as a |
| transitory shock so that's another way |
|
|
| align:start position:0% |
| transitory shock so that's another way |
| |
|
|
| align:start position:0% |
| transitory shock so that's another way |
| to try to to deal with a |
|
|
| align:start position:0% |
| to try to to deal with a |
| |
|
|
| align:start position:0% |
| to try to to deal with a |
| problem uh and then there's sort of a |
|
|
| align:start position:0% |
| problem uh and then there's sort of a |
| |
|
|
| align:start position:0% |
| problem uh and then there's sort of a |
| Public Finance Tax |
|
|
| align:start position:0% |
| Public Finance Tax |
| |
|
|
| align:start position:0% |
| Public Finance Tax |
| literature different people assume |
|
|
| align:start position:0% |
| literature different people assume |
| |
|
|
| align:start position:0% |
| literature different people assume |
| different things about different kind of |
|
|
| align:start position:0% |
| different things about different kind of |
| |
|
|
| align:start position:0% |
| different things about different kind of |
| taxes some taxes assume to be permanent |
|
|
| align:start position:0% |
| taxes some taxes assume to be permanent |
| |
|
|
| align:start position:0% |
| taxes some taxes assume to be permanent |
| others assume to be transitory and then |
|
|
| align:start position:0% |
| others assume to be transitory and then |
| |
|
|
| align:start position:0% |
| others assume to be transitory and then |
| you kind of see how households react to |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| that so the uh Benchmark model people |
|
|
| align:start position:0% |
| that so the uh Benchmark model people |
| |
|
|
| align:start position:0% |
| that so the uh Benchmark model people |
| use for saying quote how much insurance |
|
|
| align:start position:0% |
| use for saying quote how much insurance |
| |
|
|
| align:start position:0% |
| use for saying quote how much insurance |
| is there in actually in the data is this |
|
|
| align:start position:0% |
| is there in actually in the data is this |
| |
|
|
| align:start position:0% |
| is there in actually in the data is this |
| blondel uh pistar Preston paper I doubt |
|
|
| align:start position:0% |
| blondel uh pistar Preston paper I doubt |
| |
|
|
| align:start position:0% |
| blondel uh pistar Preston paper I doubt |
| if we'll get to that today it is in the |
|
|
| align:start position:0% |
| if we'll get to that today it is in the |
| |
|
|
| align:start position:0% |
| if we'll get to that today it is in the |
| appendix so I have it in the |
|
|
| align:start position:0% |
| appendix so I have it in the |
| |
|
|
| align:start position:0% |
| appendix so I have it in the |
| slides uh time permitting uh but it's |
|
|
| align:start position:0% |
| slides uh time permitting uh but it's |
| |
|
|
| align:start position:0% |
| slides uh time permitting uh but it's |
| basically a covariance decomposition of |
|
|
| align:start position:0% |
| basically a covariance decomposition of |
| |
|
|
| align:start position:0% |
| basically a covariance decomposition of |
| the income and consumption |
|
|
| align:start position:0% |
| the income and consumption |
| |
|
|
| align:start position:0% |
| the income and consumption |
| process um so that's the quote view of |
|
|
| align:start position:0% |
| process um so that's the quote view of |
| |
|
|
| align:start position:0% |
| process um so that's the quote view of |
| the data then for the models you start |
|
|
| align:start position:0% |
| the data then for the models you start |
| |
|
|
| align:start position:0% |
| the data then for the models you start |
| with the standard incomplete markets |
|
|
| align:start position:0% |
| with the standard incomplete markets |
| |
|
|
| align:start position:0% |
| with the standard incomplete markets |
| model assuming no access to contingent |
|
|
| align:start position:0% |
| model assuming no access to contingent |
| |
|
|
| align:start position:0% |
| model assuming no access to contingent |
| claims but allowing some kind of |
|
|
| align:start position:0% |
| claims but allowing some kind of |
| |
|
|
| align:start position:0% |
| claims but allowing some kind of |
| insurance uh through buying and selling |
|
|
| align:start position:0% |
| insurance uh through buying and selling |
| |
|
|
| align:start position:0% |
| insurance uh through buying and selling |
| bonds now let me pause for a second just |
|
|
| align:start position:0% |
| bonds now let me pause for a second just |
| |
|
|
| align:start position:0% |
| bonds now let me pause for a second just |
| in case it's not |
|
|
| align:start position:0% |
| in case it's not |
| |
|
|
| align:start position:0% |
| in case it's not |
| clear and this literature uses confusing |
|
|
| align:start position:0% |
| clear and this literature uses confusing |
| |
|
|
| align:start position:0% |
| clear and this literature uses confusing |
| language actually if you thought about a |
|
|
| align:start position:0% |
| language actually if you thought about a |
| |
|
|
| align:start position:0% |
| language actually if you thought about a |
| household in isolation or a business you |
|
|
| align:start position:0% |
| household in isolation or a business you |
| |
|
|
| align:start position:0% |
| household in isolation or a business you |
| know they have ups and downs of income |
|
|
| align:start position:0% |
| know they have ups and downs of income |
| |
|
|
| align:start position:0% |
| know they have ups and downs of income |
| and it's clear that by you know saving |
|
|
| align:start position:0% |
| and it's clear that by you know saving |
| |
|
|
| align:start position:0% |
| and it's clear that by you know saving |
| you kind of smooth off the Peaks so that |
|
|
| align:start position:0% |
| you kind of smooth off the Peaks so that |
| |
|
|
| align:start position:0% |
| you kind of smooth off the Peaks so that |
| higher income does not make its way into |
|
|
| align:start position:0% |
| higher income does not make its way into |
| |
|
|
| align:start position:0% |
| higher income does not make its way into |
| consumption and uh likewise in The |
|
|
| align:start position:0% |
| consumption and uh likewise in The |
| |
|
|
| align:start position:0% |
| consumption and uh likewise in The |
| Valleys when income is really low you |
|
|
| align:start position:0% |
| Valleys when income is really low you |
| |
|
|
| align:start position:0% |
| Valleys when income is really low you |
| can carry forward that savings to that |
|
|
| align:start position:0% |
| can carry forward that savings to that |
| |
|
|
| align:start position:0% |
| can carry forward that savings to that |
| spot or bar |
|
|
| align:start position:0% |
| spot or bar |
| |
|
|
| align:start position:0% |
| spot or bar |
| which makes the valley less deep so |
|
|
| align:start position:0% |
| which makes the valley less deep so |
| |
|
|
| align:start position:0% |
| which makes the valley less deep so |
| consumption is smooth to a large degree |
|
|
| align:start position:0% |
| consumption is smooth to a large degree |
| |
|
|
| align:start position:0% |
| consumption is smooth to a large degree |
| but not |
|
|
| align:start position:0% |
| but not |
| |
|
|
| align:start position:0% |
| but not |
| completely against these |
|
|
| align:start position:0% |
| completely against these |
| |
|
|
| align:start position:0% |
| completely against these |
| fluctuations now what's the difference |
|
|
| align:start position:0% |
| fluctuations now what's the difference |
| |
|
|
| align:start position:0% |
| fluctuations now what's the difference |
| between that and the full risk sharing |
|
|
| align:start position:0% |
| between that and the full risk sharing |
| |
|
|
| align:start position:0% |
| between that and the full risk sharing |
| model well the idea there is that you |
|
|
| align:start position:0% |
| model well the idea there is that you |
| |
|
|
| align:start position:0% |
| model well the idea there is that you |
| don't have not everyone's facing |
|
|
| align:start position:0% |
| don't have not everyone's facing |
| |
|
|
| align:start position:0% |
| don't have not everyone's facing |
| idiosyncratic and transitory shocks at |
|
|
| align:start position:0% |
| idiosyncratic and transitory shocks at |
| |
|
|
| align:start position:0% |
| idiosyncratic and transitory shocks at |
| the same time so as in the Rocky |
|
|
| align:start position:0% |
| the same time so as in the Rocky |
| |
|
|
| align:start position:0% |
| the same time so as in the Rocky |
| Mountains diagram you know Peaks and |
|
|
| align:start position:0% |
| Mountains diagram you know Peaks and |
| |
|
|
| align:start position:0% |
| Mountains diagram you know Peaks and |
| valleys come at different stages and |
|
|
| align:start position:0% |
| valleys come at different stages and |
| |
|
|
| align:start position:0% |
| valleys come at different stages and |
| even after |
|
|
| align:start position:0% |
| even after |
| |
|
|
| align:start position:0% |
| even after |
| you act as if a household would do |
|
|
| align:start position:0% |
| you act as if a household would do |
| |
|
|
| align:start position:0% |
| you act as if a household would do |
| everything that it could on its own |
|
|
| align:start position:0% |
| everything that it could on its own |
| |
|
|
| align:start position:0% |
| everything that it could on its own |
| you're still left left with this |
|
|
| align:start position:0% |
| you're still left left with this |
| |
|
|
| align:start position:0% |
| you're still left left with this |
| asynchronous timing so what the RIS |
|
|
| align:start position:0% |
| asynchronous timing so what the RIS |
| |
|
|
| align:start position:0% |
| asynchronous timing so what the RIS |
| sharing model is basically doing is |
|
|
| align:start position:0% |
| sharing model is basically doing is |
| |
|
|
| align:start position:0% |
| sharing model is basically doing is |
| transferring consumption around in the |
|
|
| align:start position:0% |
| transferring consumption around in the |
| |
|
|
| align:start position:0% |
| transferring consumption around in the |
| crosssection to get even flatter |
|
|
| align:start position:0% |
| crosssection to get even flatter |
| |
|
|
| align:start position:0% |
| crosssection to get even flatter |
| consumption and the only thing that |
|
|
| align:start position:0% |
| consumption and the only thing that |
| |
|
|
| align:start position:0% |
| consumption and the only thing that |
| would be left then if you believe the |
|
|
| align:start position:0% |
| would be left then if you believe the |
| |
|
|
| align:start position:0% |
| would be left then if you believe the |
| forris sharing model are those shocks |
|
|
| align:start position:0% |
| forris sharing model are those shocks |
| |
|
|
| align:start position:0% |
| forris sharing model are those shocks |
| that basically somehow get left in |
|
|
| align:start position:0% |
| that basically somehow get left in |
| |
|
|
| align:start position:0% |
| that basically somehow get left in |
| aggregate consumption after all that |
|
|
| align:start position:0% |
| aggregate consumption after all that |
| |
|
|
| align:start position:0% |
| aggregate consumption after all that |
| smoothing the only part of the Peaks and |
|
|
| align:start position:0% |
| smoothing the only part of the Peaks and |
| |
|
|
| align:start position:0% |
| smoothing the only part of the Peaks and |
| valleys that's common across all the |
|
|
| align:start position:0% |
| valleys that's common across all the |
| |
|
|
| align:start position:0% |
| valleys that's common across all the |
| households would be left and everything |
|
|
| align:start position:0% |
| households would be left and everything |
| |
|
|
| align:start position:0% |
| households would be left and everything |
| else would be flattened out so this |
|
|
| align:start position:0% |
| else would be flattened out so this |
| |
|
|
| align:start position:0% |
| else would be flattened out so this |
| literature you know it's true that you |
|
|
| align:start position:0% |
| literature you know it's true that you |
| |
|
|
| align:start position:0% |
| literature you know it's true that you |
| can do an enormous amount of smoothing |
|
|
| align:start position:0% |
| can do an enormous amount of smoothing |
| |
|
|
| align:start position:0% |
| can do an enormous amount of smoothing |
| by borrowing and |
|
|
| align:start position:0% |
| by borrowing and |
| |
|
|
| align:start position:0% |
| by borrowing and |
| lending but it is not true that you can |
|
|
| align:start position:0% |
| lending but it is not true that you can |
| |
|
|
| align:start position:0% |
| lending but it is not true that you can |
| do everything that would be possible |
|
|
| align:start position:0% |
| do everything that would be possible |
| |
|
|
| align:start position:0% |
| do everything that would be possible |
| with with greater amounts of insurance |
|
|
| align:start position:0% |
| with with greater amounts of insurance |
| |
|
|
| align:start position:0% |
| with with greater amounts of insurance |
| anyway so they start with the standard |
|
|
| align:start position:0% |
| anyway so they start with the standard |
| |
|
|
| align:start position:0% |
| anyway so they start with the standard |
| note that we standard it's standard for |
|
|
| align:start position:0% |
| note that we standard it's standard for |
| |
|
|
| align:start position:0% |
| note that we standard it's standard for |
| the certain branches of the macro |
|
|
| align:start position:0% |
| the certain branches of the macro |
| |
|
|
| align:start position:0% |
| the certain branches of the macro |
| literature in complete Marcus literature |
|
|
| align:start position:0% |
| literature in complete Marcus literature |
| |
|
|
| align:start position:0% |
| literature in complete Marcus literature |
| uh now you may or may not put on a life |
|
|
| align:start position:0% |
| uh now you may or may not put on a life |
| |
|
|
| align:start position:0% |
| uh now you may or may not put on a life |
| cycle to be realistic you'd say the |
|
|
| align:start position:0% |
| cycle to be realistic you'd say the |
| |
|
|
| align:start position:0% |
| cycle to be realistic you'd say the |
| household faces a stochastic probability |
|
|
| align:start position:0% |
| household faces a stochastic probability |
| |
|
|
| align:start position:0% |
| household faces a stochastic probability |
| of dying and |
|
|
| align:start position:0% |
| of dying and |
| |
|
|
| align:start position:0% |
| of dying and |
| uh |
|
|
| align:start position:0% |
| uh |
| |
|
|
| align:start position:0% |
| uh |
| um that makes them more and more |
|
|
| align:start position:0% |
| um that makes them more and more |
| |
|
|
| align:start position:0% |
| um that makes them more and more |
| vulnerable as they get older and older |
|
|
| align:start position:0% |
| vulnerable as they get older and older |
| |
|
|
| align:start position:0% |
| vulnerable as they get older and older |
| in some sense because they can't smooth |
|
|
| align:start position:0% |
| in some sense because they can't smooth |
| |
|
|
| align:start position:0% |
| in some sense because they can't smooth |
| it out into or they have to frontload |
|
|
| align:start position:0% |
| it out into or they have to frontload |
| |
|
|
| align:start position:0% |
| it out into or they have to frontload |
| stuff into savings to be able to cope |
|
|
| align:start position:0% |
| stuff into savings to be able to cope |
| |
|
|
| align:start position:0% |
| stuff into savings to be able to cope |
| with fluctuations as they get older so |
|
|
| align:start position:0% |
| with fluctuations as they get older so |
| |
|
|
| align:start position:0% |
| with fluctuations as they get older so |
| it does matter whether the Horizon is |
|
|
| align:start position:0% |
| it does matter whether the Horizon is |
| |
|
|
| align:start position:0% |
| it does matter whether the Horizon is |
| infinite or |
|
|
| align:start position:0% |
| infinite or |
| |
|
|
| align:start position:0% |
| infinite or |
| finite uh there are permanent and |
|
|
| align:start position:0% |
| finite uh there are permanent and |
| |
|
|
| align:start position:0% |
| finite uh there are permanent and |
| transitory shocks to earnings while they |
|
|
| align:start position:0% |
| transitory shocks to earnings while they |
| |
|
|
| align:start position:0% |
| transitory shocks to earnings while they |
| earn but if it's a life cycle model and |
|
|
| align:start position:0% |
| earn but if it's a life cycle model and |
| |
|
|
| align:start position:0% |
| earn but if it's a life cycle model and |
| as in the US where there is literally |
|
|
| align:start position:0% |
| as in the US where there is literally |
| |
|
|
| align:start position:0% |
| as in the US where there is literally |
| retirement then you know earnings go to |
|
|
| align:start position:0% |
| retirement then you know earnings go to |
| |
|
|
| align:start position:0% |
| retirement then you know earnings go to |
| zero now you may have some income stream |
|
|
| align:start position:0% |
| zero now you may have some income stream |
| |
|
|
| align:start position:0% |
| zero now you may have some income stream |
| from Social Security and these guys will |
|
|
| align:start position:0% |
| from Social Security and these guys will |
| |
|
|
| align:start position:0% |
| from Social Security and these guys will |
| load that |
|
|
| align:start position:0% |
| load that |
| |
|
|
| align:start position:0% |
| load that |
| in uh and you may have some assets |
|
|
| align:start position:0% |
| in uh and you may have some assets |
| |
|
|
| align:start position:0% |
| in uh and you may have some assets |
| you've put in a a pension fund which has |
|
|
| align:start position:0% |
| you've put in a a pension fund which has |
| |
|
|
| align:start position:0% |
| you've put in a a pension fund which has |
| kind of an insurance component to it in |
|
|
| align:start position:0% |
| kind of an insurance component to it in |
| |
|
|
| align:start position:0% |
| kind of an insurance component to it in |
| the sense that you're getting a income |
|
|
| align:start position:0% |
| the sense that you're getting a income |
| |
|
|
| align:start position:0% |
| the sense that you're getting a income |
| stream from the |
|
|
| align:start position:0% |
| stream from the |
| |
|
|
| align:start position:0% |
| stream from the |
| pension uh but averaging |
|
|
| align:start position:0% |
| pension uh but averaging |
| |
|
|
| align:start position:0% |
| pension uh but averaging |
| over the mortality risk in the |
|
|
| align:start position:0% |
| over the mortality risk in the |
| |
|
|
| align:start position:0% |
| over the mortality risk in the |
| population so there's a bit of insurance |
|
|
| align:start position:0% |
| population so there's a bit of insurance |
| |
|
|
| align:start position:0% |
| population so there's a bit of insurance |
| and standard Pension |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| funds uh another version has uh |
|
|
| align:start position:0% |
| funds uh another version has uh |
| |
|
|
| align:start position:0% |
| funds uh another version has uh |
| borrowing limits there's something |
|
|
| align:start position:0% |
| borrowing limits there's something |
| |
|
|
| align:start position:0% |
| borrowing limits there's something |
| called the natural borrowing limit or |
|
|
| align:start position:0% |
| called the natural borrowing limit or |
| |
|
|
| align:start position:0% |
| called the natural borrowing limit or |
| the the zero zero is obvious you can't |
|
|
| align:start position:0% |
| the the zero zero is obvious you can't |
| |
|
|
| align:start position:0% |
| the the zero zero is obvious you can't |
| borrow anything at all or you'll put |
|
|
| align:start position:0% |
| borrow anything at all or you'll put |
| |
|
|
| align:start position:0% |
| borrow anything at all or you'll put |
| just a bound can borrow 10% of your |
|
|
| align:start position:0% |
| just a bound can borrow 10% of your |
| |
|
|
| align:start position:0% |
| just a bound can borrow 10% of your |
| assets or your income the the natural |
|
|
| align:start position:0% |
| assets or your income the the natural |
| |
|
|
| align:start position:0% |
| assets or your income the the natural |
| borrowing limit is something like |
|
|
| align:start position:0% |
| borrowing limit is something like |
| |
|
|
| align:start position:0% |
| borrowing limit is something like |
| this you always have to repay your debt |
|
|
| align:start position:0% |
| this you always have to repay your debt |
| |
|
|
| align:start position:0% |
| this you always have to repay your debt |
| so you can't borrow more than what you |
|
|
| align:start position:0% |
| so you can't borrow more than what you |
| |
|
|
| align:start position:0% |
| so you can't borrow more than what you |
| could repay in the worst possible income |
|
|
| align:start position:0% |
| could repay in the worst possible income |
| |
|
|
| align:start position:0% |
| could repay in the worst possible income |
| realization in the |
|
|
| align:start position:0% |
| realization in the |
| |
|
|
| align:start position:0% |
| realization in the |
| future and then it matters a lot what |
|
|
| align:start position:0% |
| future and then it matters a lot what |
| |
|
|
| align:start position:0% |
| future and then it matters a lot what |
| you're assuming about the income process |
|
|
| align:start position:0% |
| you're assuming about the income process |
| |
|
|
| align:start position:0% |
| you're assuming about the income process |
| right if there's a small chance of of |
|
|
| align:start position:0% |
| right if there's a small chance of of |
| |
|
|
| align:start position:0% |
| right if there's a small chance of of |
| zero income and your debt is due in |
|
|
| align:start position:0% |
| zero income and your debt is due in |
| |
|
|
| align:start position:0% |
| zero income and your debt is due in |
| that situation then effectively you |
|
|
| align:start position:0% |
| that situation then effectively you |
| |
|
|
| align:start position:0% |
| that situation then effectively you |
| can't borrow at all so it's a rather |
|
|
| align:start position:0% |
| can't borrow at all so it's a rather |
| |
|
|
| align:start position:0% |
| can't borrow at all so it's a rather |
| stringent |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| Criterion and then they'll take C you'll |
|
|
| align:start position:0% |
| Criterion and then they'll take C you'll |
| |
|
|
| align:start position:0% |
| Criterion and then they'll take C you'll |
| see Klan and viilante then take the |
|
|
| align:start position:0% |
| see Klan and viilante then take the |
| |
|
|
| align:start position:0% |
| see Klan and viilante then take the |
| model and uh and they simulate hence the |
|
|
| align:start position:0% |
| model and uh and they simulate hence the |
| |
|
|
| align:start position:0% |
| model and uh and they simulate hence the |
| Sim artificial data from the model |
|
|
| align:start position:0% |
| Sim artificial data from the model |
| |
|
|
| align:start position:0% |
| Sim artificial data from the model |
| itself |
|
|
| align:start position:0% |
| itself |
| |
|
|
| align:start position:0% |
| itself |
| now |
|
|
| align:start position:0% |
| now |
| |
|
|
| align:start position:0% |
| now |
| um there's two reasons for doing that |
|
|
| align:start position:0% |
| um there's two reasons for doing that |
| |
|
|
| align:start position:0% |
| um there's two reasons for doing that |
| first of all this blundel pesari PR |
|
|
| align:start position:0% |
| first of all this blundel pesari PR |
| |
|
|
| align:start position:0% |
| first of all this blundel pesari PR |
| Preston |
|
|
| align:start position:0% |
| Preston |
| |
|
|
| align:start position:0% |
| Preston |
| paper uh is doing something with the |
|
|
| align:start position:0% |
| paper uh is doing something with the |
| |
|
|
| align:start position:0% |
| paper uh is doing something with the |
| data it's not a direct look at the data |
|
|
| align:start position:0% |
| data it's not a direct look at the data |
| |
|
|
| align:start position:0% |
| data it's not a direct look at the data |
| but the summary statistics come from |
|
|
| align:start position:0% |
| but the summary statistics come from |
| |
|
|
| align:start position:0% |
| but the summary statistics come from |
| this BPP algorithm so they want us if |
|
|
| align:start position:0% |
| this BPP algorithm so they want us if |
| |
|
|
| align:start position:0% |
| this BPP algorithm so they want us if |
| you want a common ground which is what's |
|
|
| align:start position:0% |
| you want a common ground which is what's |
| |
|
|
| align:start position:0% |
| you want a common ground which is what's |
| in the data through BPP then let's look |
|
|
| align:start position:0% |
| in the data through BPP then let's look |
| |
|
|
| align:start position:0% |
| in the data through BPP then let's look |
| at the data generated by the model |
|
|
| align:start position:0% |
| at the data generated by the model |
| |
|
|
| align:start position:0% |
| at the data generated by the model |
| through BPP and compare apples to |
|
|
| align:start position:0% |
| through BPP and compare apples to |
| |
|
|
| align:start position:0% |
| through BPP and compare apples to |
| apples |
|
|
| align:start position:0% |
| apples |
| |
|
|
| align:start position:0% |
| apples |
| uh on the other hand when you have a |
|
|
| align:start position:0% |
| uh on the other hand when you have a |
| |
|
|
| align:start position:0% |
| uh on the other hand when you have a |
| model and you simulated it that that is |
|
|
| align:start position:0% |
| model and you simulated it that that is |
| |
|
|
| align:start position:0% |
| model and you simulated it that that is |
| the reality you know |
|
|
| align:start position:0% |
| the reality you know |
| |
|
|
| align:start position:0% |
| the reality you know |
| exactly what the economy is like so you |
|
|
| align:start position:0% |
| exactly what the economy is like so you |
| |
|
|
| align:start position:0% |
| exactly what the economy is like so you |
| know they also use this pickup |
|
|
| align:start position:0% |
| know they also use this pickup |
| |
|
|
| align:start position:0% |
| know they also use this pickup |
| distortions where BPP is kind of giving |
|
|
| align:start position:0% |
| distortions where BPP is kind of giving |
| |
|
|
| align:start position:0% |
| distortions where BPP is kind of giving |
| you a summary statistic of the degree of |
|
|
| align:start position:0% |
| you a summary statistic of the degree of |
| |
|
|
| align:start position:0% |
| you a summary statistic of the degree of |
| insurance which is not actually what's |
|
|
| align:start position:0% |
| insurance which is not actually what's |
| |
|
|
| align:start position:0% |
| insurance which is not actually what's |
| going on in the underlying model so they |
|
|
| align:start position:0% |
| going on in the underlying model so they |
| |
|
|
| align:start position:0% |
| going on in the underlying model so they |
| use this to look at the biases or what |
|
|
| align:start position:0% |
| use this to look at the biases or what |
| |
|
|
| align:start position:0% |
| use this to look at the biases or what |
| can generate the bias the intuition |
|
|
| align:start position:0% |
| can generate the bias the intuition |
| |
|
|
| align:start position:0% |
| can generate the bias the intuition |
| there is pretty |
|
|
| align:start position:0% |
| there is pretty |
| |
|
|
| align:start position:0% |
| there is pretty |
| straightforward you know zero borrowing |
|
|
| align:start position:0% |
| straightforward you know zero borrowing |
| |
|
|
| align:start position:0% |
| straightforward you know zero borrowing |
| uh or limits to borrowing are like a |
|
|
| align:start position:0% |
| uh or limits to borrowing are like a |
| |
|
|
| align:start position:0% |
| uh or limits to borrowing are like a |
| corner and you're either constrained or |
|
|
| align:start position:0% |
| corner and you're either constrained or |
| |
|
|
| align:start position:0% |
| corner and you're either constrained or |
| you're not constrained so that's that's |
|
|
| align:start position:0% |
| you're not constrained so that's that's |
| |
|
|
| align:start position:0% |
| you're not constrained so that's that's |
| a |
|
|
| align:start position:0% |
| a |
| |
|
|
| align:start position:0% |
| a |
| nonlinearity whereas BPP algorithm is |
|
|
| align:start position:0% |
| nonlinearity whereas BPP algorithm is |
| |
|
|
| align:start position:0% |
| nonlinearity whereas BPP algorithm is |
| basically linear so so the distortions |
|
|
| align:start position:0% |
| basically linear so so the distortions |
| |
|
|
| align:start position:0% |
| basically linear so so the distortions |
| get introduced by you |
|
|
| align:start position:0% |
| get introduced by you |
| |
|
|
| align:start position:0% |
| get introduced by you |
| know the more likely you are to be hit |
|
|
| align:start position:0% |
| know the more likely you are to be hit |
| |
|
|
| align:start position:0% |
| know the more likely you are to be hit |
| Corners the more the higher the |
|
|
| align:start position:0% |
| Corners the more the higher the |
| |
|
|
| align:start position:0% |
| Corners the more the higher the |
| Distortion |
|
|
| align:start position:0% |
| Distortion |
| |
|
|
| align:start position:0% |
| Distortion |
| is |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| okay |
|
|
| align:start position:0% |
| okay |
| |
|
|
| align:start position:0% |
| okay |
| so the uh standard incomplete markets |
|
|
| align:start position:0% |
| so the uh standard incomplete markets |
| |
|
|
| align:start position:0% |
| so the uh standard incomplete markets |
| model generates an insurance coefficient |
|
|
| align:start position:0% |
| model generates an insurance coefficient |
| |
|
|
| align:start position:0% |
| model generates an insurance coefficient |
| for transitory shocks of |
|
|
| align:start position:0% |
| for transitory shocks of |
| |
|
|
| align:start position:0% |
| for transitory shocks of |
| 94% |
|
|
| align:start position:0% |
| 94% |
| |
|
|
| align:start position:0% |
| 94% |
| uh in the natural borrowing constraint |
|
|
| align:start position:0% |
| uh in the natural borrowing constraint |
| |
|
|
| align:start position:0% |
| uh in the natural borrowing constraint |
| economy or 82% in the zero borrowing |
|
|
| align:start position:0% |
| economy or 82% in the zero borrowing |
| |
|
|
| align:start position:0% |
| economy or 82% in the zero borrowing |
| constraint economy now that's a |
|
|
| align:start position:0% |
| constraint economy now that's a |
| |
|
|
| align:start position:0% |
| constraint economy now that's a |
| coefficient for insurance so that's a |
|
|
| align:start position:0% |
| coefficient for insurance so that's a |
| |
|
|
| align:start position:0% |
| coefficient for insurance so that's a |
| good thing you know be careful you don't |
|
|
| align:start position:0% |
| good thing you know be careful you don't |
| |
|
|
| align:start position:0% |
| good thing you know be careful you don't |
| get flipped around because we've been |
|
|
| align:start position:0% |
| get flipped around because we've been |
| |
|
|
| align:start position:0% |
| get flipped around because we've been |
| looking |
|
|
| align:start position:0% |
| looking |
| |
|
|
| align:start position:0% |
| looking |
| at the degree to which consumption |
|
|
| align:start position:0% |
| at the degree to which consumption |
| |
|
|
| align:start position:0% |
| at the degree to which consumption |
| fluctuates with income you so you start |
|
|
| align:start position:0% |
| fluctuates with income you so you start |
| |
|
|
| align:start position:0% |
| fluctuates with income you so you start |
| to think High numbers are bad but this |
|
|
| align:start position:0% |
| to think High numbers are bad but this |
| |
|
|
| align:start position:0% |
| to think High numbers are bad but this |
| is one minus that okay so for them high |
|
|
| align:start position:0% |
| is one minus that okay so for them high |
| |
|
|
| align:start position:0% |
| is one minus that okay so for them high |
| numbers means insurance which means a |
|
|
| align:start position:0% |
| numbers means insurance which means a |
| |
|
|
| align:start position:0% |
| numbers means insurance which means a |
| good thing those are numbers you know |
|
|
| align:start position:0% |
| good thing those are numbers you know |
| |
|
|
| align:start position:0% |
| good thing those are numbers you know |
| 9482 compared to the BPP run on the |
|
|
| align:start position:0% |
| 9482 compared to the BPP run on the |
| |
|
|
| align:start position:0% |
| 9482 compared to the BPP run on the |
| actual data which is 95 so that's |
|
|
| align:start position:0% |
| actual data which is 95 so that's |
| |
|
|
| align:start position:0% |
| actual data which is 95 so that's |
| excellent |
|
|
| align:start position:0% |
| excellent |
| |
|
|
| align:start position:0% |
| excellent |
| fit uh but when they look at the |
|
|
| align:start position:0% |
| fit uh but when they look at the |
| |
|
|
| align:start position:0% |
| fit uh but when they look at the |
| insurance Co coefficient for permanent |
|
|
| align:start position:0% |
| insurance Co coefficient for permanent |
| |
|
|
| align:start position:0% |
| insurance Co coefficient for permanent |
| shocks it's 22 or 7% depending in the |
|
|
| align:start position:0% |
| shocks it's 22 or 7% depending in the |
| |
|
|
| align:start position:0% |
| shocks it's 22 or 7% depending in the |
| model what you assume about credit but |
|
|
| align:start position:0% |
| model what you assume about credit but |
| |
|
|
| align:start position:0% |
| model what you assume about credit but |
| in the actual data it's uh 36% and here |
|
|
| align:start position:0% |
| in the actual data it's uh 36% and here |
| |
|
|
| align:start position:0% |
| in the actual data it's uh 36% and here |
| already you're seeing you know this |
|
|
| align:start position:0% |
| already you're seeing you know this |
| |
|
|
| align:start position:0% |
| already you're seeing you know this |
| recurrent theme that there's better |
|
|
| align:start position:0% |
| recurrent theme that there's better |
| |
|
|
| align:start position:0% |
| recurrent theme that there's better |
| smoothing against even the permanent |
|
|
| align:start position:0% |
| smoothing against even the permanent |
| |
|
|
| align:start position:0% |
| smoothing against even the permanent |
| shocks in the data than than these |
|
|
| align:start position:0% |
| shocks in the data than than these |
| |
|
|
| align:start position:0% |
| shocks in the data than than these |
| models |
|
|
| align:start position:0% |
| models |
| |
|
|
| align:start position:0% |
| models |
| allow and then if you looked at the life |
|
|
| align:start position:0% |
| allow and then if you looked at the life |
| |
|
|
| align:start position:0% |
| allow and then if you looked at the life |
| cycle uh through the lens of the model |
|
|
| align:start position:0% |
| cycle uh through the lens of the model |
| |
|
|
| align:start position:0% |
| cycle uh through the lens of the model |
| you would see better insurance as people |
|
|
| align:start position:0% |
| you would see better insurance as people |
| |
|
|
| align:start position:0% |
| you would see better insurance as people |
| get |
|
|
| align:start position:0% |
| get |
| |
|
|
| align:start position:0% |
| get |
| older but in the data it's not there |
|
|
| align:start position:0% |
| older but in the data it's not there |
| |
|
|
| align:start position:0% |
| older but in the data it's not there |
| there's no age profile in the data so uh |
|
|
| align:start position:0% |
| there's no age profile in the data so uh |
| |
|
|
| align:start position:0% |
| there's no age profile in the data so uh |
| the so the model another way to say this |
|
|
| align:start position:0% |
| the so the model another way to say this |
| |
|
|
| align:start position:0% |
| the so the model another way to say this |
| is generating too much consumption |
|
|
| align:start position:0% |
| is generating too much consumption |
| |
|
|
| align:start position:0% |
| is generating too much consumption |
| smoothing for the for the older workers |
|
|
| align:start position:0% |
| smoothing for the for the older workers |
| |
|
|
| align:start position:0% |
| smoothing for the for the older workers |
| relative to the data or too little |
|
|
| align:start position:0% |
| relative to the data or too little |
| |
|
|
| align:start position:0% |
| relative to the data or too little |
| smoothing for workers in the early stage |
|
|
| align:start position:0% |
| smoothing for workers in the early stage |
| |
|
|
| align:start position:0% |
| smoothing for workers in the early stage |
| of their life cycle relative to the data |
|
|
| align:start position:0% |
| of their life cycle relative to the data |
| |
|
|
| align:start position:0% |
| of their life cycle relative to the data |
| now if you're skeptical you've got to be |
|
|
| align:start position:0% |
| now if you're skeptical you've got to be |
| |
|
|
| align:start position:0% |
| now if you're skeptical you've got to be |
| skeptical about BPP because it's |
|
|
| align:start position:0% |
| skeptical about BPP because it's |
| |
|
|
| align:start position:0% |
| skeptical about BPP because it's |
| supposed to be quote a fact that they're |
|
|
| align:start position:0% |
| supposed to be quote a fact that they're |
| |
|
|
| align:start position:0% |
| supposed to be quote a fact that they're |
| finding we'll look at some of that data |
|
|
| align:start position:0% |
| finding we'll look at some of that data |
| |
|
|
| align:start position:0% |
| finding we'll look at some of that data |
| though |
|
|
| align:start position:0% |
| though |
| |
|
|
| align:start position:0% |
| though |
| through the lens of the cross-sectional |
|
|
| align:start position:0% |
| through the lens of the cross-sectional |
| |
|
|
| align:start position:0% |
| through the lens of the cross-sectional |
| distributions when we get to Deton and |
|
|
| align:start position:0% |
| distributions when we get to Deton and |
| |
|
|
| align:start position:0% |
| distributions when we get to Deton and |
| taxon and then you'll kind of see |
|
|
| align:start position:0% |
| taxon and then you'll kind of see |
| |
|
|
| align:start position:0% |
| taxon and then you'll kind of see |
| something else and I haven't thought |
|
|
| align:start position:0% |
| something else and I haven't thought |
| |
|
|
| align:start position:0% |
| something else and I haven't thought |
| about how to reconcile that |
|
|
| align:start position:0% |
| about how to reconcile that |
| |
|
|
| align:start position:0% |
| about how to reconcile that |
| yet um this is what I said about the |
|
|
| align:start position:0% |
| yet um this is what I said about the |
| |
|
|
| align:start position:0% |
| yet um this is what I said about the |
| reliability when they simulate and use |
|
|
| align:start position:0% |
| reliability when they simulate and use |
| |
|
|
| align:start position:0% |
| reliability when they simulate and use |
| the data from the model it's fine for |
|
|
| align:start position:0% |
| the data from the model it's fine for |
| |
|
|
| align:start position:0% |
| the data from the model it's fine for |
| the transitory shocks |
|
|
| align:start position:0% |
| the transitory shocks |
| |
|
|
| align:start position:0% |
| the transitory shocks |
| largely um but it tends to underestimate |
|
|
| align:start position:0% |
| largely um but it tends to underestimate |
| |
|
|
| align:start position:0% |
| largely um but it tends to underestimate |
| the true coefficient for the permanent |
|
|
| align:start position:0% |
| the true coefficient for the permanent |
| |
|
|
| align:start position:0% |
| the true coefficient for the permanent |
| shocks uh well that's actually making |
|
|
| align:start position:0% |
| shocks uh well that's actually making |
| |
|
|
| align:start position:0% |
| shocks uh well that's actually making |
| the situation worse because then the BPP |
|
|
| align:start position:0% |
| the situation worse because then the BPP |
| |
|
|
| align:start position:0% |
| the situation worse because then the BPP |
| measure which shows good insurance for |
|
|
| align:start position:0% |
| measure which shows good insurance for |
| |
|
|
| align:start position:0% |
| measure which shows good insurance for |
| the permanent shocks is a lower bound |
|
|
| align:start position:0% |
| the permanent shocks is a lower bound |
| |
|
|
| align:start position:0% |
| the permanent shocks is a lower bound |
| estimate of the actual Insurance in the |
|
|
| align:start position:0% |
| estimate of the actual Insurance in the |
| |
|
|
| align:start position:0% |
| estimate of the actual Insurance in the |
| data so there's an even greater |
|
|
| align:start position:0% |
| data so there's an even greater |
| |
|
|
| align:start position:0% |
| data so there's an even greater |
| Divergence yes um can I just make sure I |
|
|
| align:start position:0% |
| Divergence yes um can I just make sure I |
| |
|
|
| align:start position:0% |
| Divergence yes um can I just make sure I |
| understood so in the data we see changes |
|
|
| align:start position:0% |
| understood so in the data we see changes |
| |
|
|
| align:start position:0% |
| understood so in the data we see changes |
| in |
|
|
| align:start position:0% |
| in |
| |
|
|
| align:start position:0% |
| in |
| how I smooth over the life cycle but in |
|
|
| align:start position:0% |
| how I smooth over the life cycle but in |
| |
|
|
| align:start position:0% |
| how I smooth over the life cycle but in |
| the model we don't see any changes or |
|
|
| align:start position:0% |
| the model we don't see any changes or |
| |
|
|
| align:start position:0% |
| the model we don't see any changes or |
| have I got it wrong way around no it's |
|
|
| align:start position:0% |
| have I got it wrong way around no it's |
| |
|
|
| align:start position:0% |
| have I got it wrong way around no it's |
| it's almost the other way around okay |
|
|
| align:start position:0% |
| it's almost the other way around okay |
| |
|
|
| align:start position:0% |
| it's almost the other way around okay |
| right yeah right so the model we see |
|
|
| align:start position:0% |
| right yeah right so the model we see |
| |
|
|
| align:start position:0% |
| right yeah right so the model we see |
| this profile but real life we don't see |
|
|
| align:start position:0% |
| this profile but real life we don't see |
| |
|
|
| align:start position:0% |
| this profile but real life we don't see |
| any so that that seems kind of |
|
|
| align:start position:0% |
| any so that that seems kind of |
| |
|
|
| align:start position:0% |
| any so that that seems kind of |
| counterintuitive I guess to us wouldn't |
|
|
| align:start position:0% |
| counterintuitive I guess to us wouldn't |
| |
|
|
| align:start position:0% |
| counterintuitive I guess to us wouldn't |
| we expect oh maybe I'm maybe I'm |
|
|
| align:start position:0% |
| we expect oh maybe I'm maybe I'm |
| |
|
|
| align:start position:0% |
| we expect oh maybe I'm maybe I'm |
| thinking of a different |
|
|
| align:start position:0% |
| thinking of a different |
| |
|
|
| align:start position:0% |
| thinking of a different |
| model well yeah the problem is |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| taking the model is gener |
|
|
| align:start position:0% |
| taking the model is gener |
| |
|
|
| align:start position:0% |
| taking the model is gener |
| generating differences by age because of |
|
|
| align:start position:0% |
| generating differences by age because of |
| |
|
|
| align:start position:0% |
| generating differences by age because of |
| the life cycle but the data does not |
|
|
| align:start position:0% |
| the life cycle but the data does not |
| |
|
|
| align:start position:0% |
| the life cycle but the data does not |
| show that so that's why you get this |
|
|
| align:start position:0% |
| show that so that's why you get this |
| |
|
|
| align:start position:0% |
| show that so that's why you get this |
| sort of oddl looking |
|
|
| align:start position:0% |
| sort of oddl looking |
| |
|
|
| align:start position:0% |
| sort of oddl looking |
| statement |
|
|
| align:start position:0% |
| statement |
| |
|
|
| align:start position:0% |
| statement |
| uh that looks like it's more criticism |
|
|
| align:start position:0% |
| uh that looks like it's more criticism |
| |
|
|
| align:start position:0% |
| uh that looks like it's more criticism |
| of the model but it's of the model |
|
|
| align:start position:0% |
| of the model but it's of the model |
| |
|
|
| align:start position:0% |
| of the model but it's of the model |
| relative to the flat data yeah so you |
|
|
| align:start position:0% |
| relative to the flat data yeah so you |
| |
|
|
| align:start position:0% |
| relative to the flat data yeah so you |
| know I mean someone once said if if the |
|
|
| align:start position:0% |
| know I mean someone once said if if the |
| |
|
|
| align:start position:0% |
| know I mean someone once said if if the |
| data don't fit the model it must be |
|
|
| align:start position:0% |
| data don't fit the model it must be |
| |
|
|
| align:start position:0% |
| data don't fit the model it must be |
| something wrong with the |
|
|
| align:start position:0% |
| something wrong with the |
| |
|
|
| align:start position:0% |
| something wrong with the |
| data |
|
|
| align:start position:0% |
| data |
| |
|
|
| align:start position:0% |
| data |
| so you know we're feeling that pressure |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| here I didn't say that |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| uh |
|
|
| align:start position:0% |
| uh |
| |
|
|
| align:start position:0% |
| uh |
| okay now how can you get more smoothing |
|
|
| align:start position:0% |
| okay now how can you get more smoothing |
| |
|
|
| align:start position:0% |
| okay now how can you get more smoothing |
| uh to generate you know less sensitivity |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| uh of consumption to these permanent |
|
|
| align:start position:0% |
| uh of consumption to these permanent |
| |
|
|
| align:start position:0% |
| uh of consumption to these permanent |
| shocks |
|
|
| align:start position:0% |
| shocks |
| |
|
|
| align:start position:0% |
| shocks |
| um |
|
|
| align:start position:0% |
| um |
| |
|
|
| align:start position:0% |
| um |
| because again |
|
|
| align:start position:0% |
| because again |
| |
|
|
| align:start position:0% |
| because again |
| there's say to get turned around so |
|
|
| align:start position:0% |
| there's say to get turned around so |
| |
|
|
| align:start position:0% |
| there's say to get turned around so |
| easily there's more smoothing in the |
|
|
| align:start position:0% |
| easily there's more smoothing in the |
| |
|
|
| align:start position:0% |
| easily there's more smoothing in the |
| data than in the model so you want the |
|
|
| align:start position:0% |
| data than in the model so you want the |
| |
|
|
| align:start position:0% |
| data than in the model so you want the |
| model to allow more smoothing to catch |
|
|
| align:start position:0% |
| model to allow more smoothing to catch |
| |
|
|
| align:start position:0% |
| model to allow more smoothing to catch |
| up to the data and uh one thing you |
|
|
| align:start position:0% |
| up to the data and uh one thing you |
| |
|
|
| align:start position:0% |
| up to the data and uh one thing you |
| could do is give households a little |
|
|
| align:start position:0% |
| could do is give households a little |
| |
|
|
| align:start position:0% |
| could do is give households a little |
| more information about the future and |
|
|
| align:start position:0% |
| more information about the future and |
| |
|
|
| align:start position:0% |
| more information about the future and |
| then the idea you know it's a smoothing |
|
|
| align:start position:0% |
| then the idea you know it's a smoothing |
| |
|
|
| align:start position:0% |
| then the idea you know it's a smoothing |
| model so you know if they know things |
|
|
| align:start position:0% |
| model so you know if they know things |
| |
|
|
| align:start position:0% |
| model so you know if they know things |
| are going to get better or worse they |
|
|
| align:start position:0% |
| are going to get better or worse they |
| |
|
|
| align:start position:0% |
| are going to get better or worse they |
| can take actions now uh and adjust |
|
|
| align:start position:0% |
| can take actions now uh and adjust |
| |
|
|
| align:start position:0% |
| can take actions now uh and adjust |
| consumption so the overall profile that |
|
|
| align:start position:0% |
| consumption so the overall profile that |
| |
|
|
| align:start position:0% |
| consumption so the overall profile that |
| would result would be smoother if they |
|
|
| align:start position:0% |
| would result would be smoother if they |
| |
|
|
| align:start position:0% |
| would result would be smoother if they |
| could anticipate future income rather |
|
|
| align:start position:0% |
| could anticipate future income rather |
| |
|
|
| align:start position:0% |
| could anticipate future income rather |
| than having to |
|
|
| align:start position:0% |
| than having to |
| |
|
|
| align:start position:0% |
| than having to |
| react to you know sudden |
|
|
| align:start position:0% |
| react to you know sudden |
| |
|
|
| align:start position:0% |
| react to you know sudden |
| information uh and a close cousin of |
|
|
| align:start position:0% |
| information uh and a close cousin of |
| |
|
|
| align:start position:0% |
| information uh and a close cousin of |
| that is |
|
|
| align:start position:0% |
| that is |
| |
|
|
| align:start position:0% |
| that is |
| to uh is to move away from some random |
|
|
| align:start position:0% |
| to uh is to move away from some random |
| |
|
|
| align:start position:0% |
| to uh is to move away from some random |
| walk to put in some you know serially |
|
|
| align:start position:0% |
| walk to put in some you know serially |
| |
|
|
| align:start position:0% |
| walk to put in some you know serially |
| correlated uh income process uh and that |
|
|
| align:start position:0% |
| correlated uh income process uh and that |
| |
|
|
| align:start position:0% |
| correlated uh income process uh and that |
| actually does a better job in |
|
|
| align:start position:0% |
| actually does a better job in |
| |
|
|
| align:start position:0% |
| actually does a better job in |
| getting getting the model to match the |
|
|
| align:start position:0% |
| getting getting the model to match the |
| |
|
|
| align:start position:0% |
| getting getting the model to match the |
| data |
|
|
| align:start position:0% |
| data |
| |
|
|
| align:start position:0% |
| data |
| um as I said you know so far in this |
|
|
| align:start position:0% |
| um as I said you know so far in this |
| |
|
|
| align:start position:0% |
| um as I said you know so far in this |
| class we haven't talked too too much |
|
|
| align:start position:0% |
| class we haven't talked too too much |
| |
|
|
| align:start position:0% |
| class we haven't talked too too much |
| about these income processes but it's |
|
|
| align:start position:0% |
| about these income processes but it's |
| |
|
|
| align:start position:0% |
| about these income processes but it's |
| really front and center here uh what you |
|
|
| align:start position:0% |
| really front and center here uh what you |
| |
|
|
| align:start position:0% |
| really front and center here uh what you |
| assume about a income process is it IID |
|
|
| align:start position:0% |
| assume about a income process is it IID |
| |
|
|
| align:start position:0% |
| assume about a income process is it IID |
| is it auto regressive you know for that |
|
|
| align:start position:0% |
| is it auto regressive you know for that |
| |
|
|
| align:start position:0% |
| is it auto regressive you know for that |
| matter with high frequency data what |
|
|
| align:start position:0% |
| matter with high frequency data what |
| |
|
|
| align:start position:0% |
| matter with high frequency data what |
| about the seasonality and |
|
|
| align:start position:0% |
| about the seasonality and |
| |
|
|
| align:start position:0% |
| about the seasonality and |
| everything |
|
|
| align:start position:0% |
| everything |
| |
|
|
| align:start position:0% |
| everything |
| [Music] |
|
|
| align:start position:0% |
| [Music] |
| |
|
|
| align:start position:0% |
| [Music] |
| um it makes you aware of the both the |
|
|
| align:start position:0% |
| um it makes you aware of the both the |
| |
|
|
| align:start position:0% |
| um it makes you aware of the both the |
| great strength and vulnerability of the |
|
|
| align:start position:0% |
| great strength and vulnerability of the |
| |
|
|
| align:start position:0% |
| great strength and vulnerability of the |
| risk sharing model which says it doesn't |
|
|
| align:start position:0% |
| risk sharing model which says it doesn't |
| |
|
|
| align:start position:0% |
| risk sharing model which says it doesn't |
| matter what time it is or what state it |
|
|
| align:start position:0% |
| matter what time it is or what state it |
| |
|
|
| align:start position:0% |
| matter what time it is or what state it |
| is just add up total consumption and |
|
|
| align:start position:0% |
| is just add up total consumption and |
| |
|
|
| align:start position:0% |
| is just add up total consumption and |
| smooth it out there's a fixed static |
|
|
| align:start position:0% |
| smooth it out there's a fixed static |
| |
|
|
| align:start position:0% |
| smooth it out there's a fixed static |
| rule for allocating risk you know there |
|
|
| align:start position:0% |
| rule for allocating risk you know there |
| |
|
|
| align:start position:0% |
| rule for allocating risk you know there |
| could be predictable periodic seasonal |
|
|
| align:start position:0% |
| could be predictable periodic seasonal |
| |
|
|
| align:start position:0% |
| could be predictable periodic seasonal |
| fluctuations or Trends in income it |
|
|
| align:start position:0% |
| fluctuations or Trends in income it |
| |
|
|
| align:start position:0% |
| fluctuations or Trends in income it |
| doesn't matter for the risk sharing |
|
|
| align:start position:0% |
| doesn't matter for the risk sharing |
| |
|
|
| align:start position:0% |
| doesn't matter for the risk sharing |
| model but here with incomplete models it |
|
|
| align:start position:0% |
| model but here with incomplete models it |
| |
|
|
| align:start position:0% |
| model but here with incomplete models it |
| matters much more |
|
|
| align:start position:0% |
| matters much more |
| |
|
|
| align:start position:0% |
| matters much more |
| because you said that Two Is Better Than |
|
|
| align:start position:0% |
| because you said that Two Is Better Than |
| |
|
|
| align:start position:0% |
| because you said that Two Is Better Than |
| One like if it's AR is going be better |
|
|
| align:start position:0% |
| One like if it's AR is going be better |
| |
|
|
| align:start position:0% |
| One like if it's AR is going be better |
| than predicting the future but like AR |
|
|
| align:start position:0% |
| than predicting the future but like AR |
| |
|
|
| align:start position:0% |
| than predicting the future but like AR |
| is this to a degree is also ability to |
|
|
| align:start position:0% |
| is this to a degree is also ability to |
| |
|
|
| align:start position:0% |
| is this to a degree is also ability to |
| predict the future right yeah it's very |
|
|
| align:start position:0% |
| predict the future right yeah it's very |
| |
|
|
| align:start position:0% |
| predict the future right yeah it's very |
| related so there's something else from |
|
|
| align:start position:0% |
| related so there's something else from |
| |
|
|
| align:start position:0% |
| related so there's something else from |
| the AR that's making it better is it |
|
|
| align:start position:0% |
| the AR that's making it better is it |
| |
|
|
| align:start position:0% |
| the AR that's making it better is it |
| because there are I guess there are |
|
|
| align:start position:0% |
| because there are I guess there are |
| |
|
|
| align:start position:0% |
| because there are I guess there are |
| other ways to predict the future like in |
|
|
| align:start position:0% |
| other ways to predict the future like in |
| |
|
|
| align:start position:0% |
| other ways to predict the future like in |
| even if the process itself is not Auto |
|
|
| align:start position:0% |
| even if the process itself is not Auto |
| |
|
|
| align:start position:0% |
| even if the process itself is not Auto |
| regressive you could get signals about |
|
|
| align:start position:0% |
| regressive you could get signals about |
| |
|
|
| align:start position:0% |
| regressive you could get signals about |
| what it's going to be in the future |
|
|
| align:start position:0% |
| what it's going to be in the future |
| |
|
|
| align:start position:0% |
| what it's going to be in the future |
| that's not as good as that's what the |
|
|
| align:start position:0% |
| that's not as good as that's what the |
| |
|
|
| align:start position:0% |
| that's not as good as that's what the |
| claim is yeah that's what they |
|
|
| align:start position:0% |
| claim is yeah that's what they |
| |
|
|
| align:start position:0% |
| claim is yeah that's what they |
| find um okay so here's the model finally |
|
|
| align:start position:0% |
| find um okay so here's the model finally |
| |
|
|
| align:start position:0% |
| find um okay so here's the model finally |
| there's no aggregate uncertainty |
|
|
| align:start position:0% |
| there's no aggregate uncertainty |
| |
|
|
| align:start position:0% |
| there's no aggregate uncertainty |
| um agents work until |
|
|
| align:start position:0% |
| um agents work until |
| |
|
|
| align:start position:0% |
| um agents work until |
| retirement but they don't die then |
|
|
| align:start position:0% |
| retirement but they don't die then |
| |
|
|
| align:start position:0% |
| retirement but they don't die then |
| there's a probability C of |
|
|
| align:start position:0% |
| there's a probability C of |
| |
|
|
| align:start position:0% |
| there's a probability C of |
| surviving uh |
|
|
| align:start position:0% |
| surviving uh |
| |
|
|
| align:start position:0% |
| surviving uh |
| this |
|
|
| align:start position:0% |
| this |
| |
|
|
| align:start position:0% |
| this |
| is I guess you know retirement is a |
|
|
| align:start position:0% |
| is I guess you know retirement is a |
| |
|
|
| align:start position:0% |
| is I guess you know retirement is a |
| really bad thing because uh if you don't |
|
|
| align:start position:0% |
| really bad thing because uh if you don't |
| |
|
|
| align:start position:0% |
| really bad thing because uh if you don't |
| retire you're going to live with |
|
|
| align:start position:0% |
| retire you're going to live with |
| |
|
|
| align:start position:0% |
| retire you're going to live with |
| probability one so anyway this is a a |
|
|
| align:start position:0% |
| probability one so anyway this is a a |
| |
|
|
| align:start position:0% |
| probability one so anyway this is a a |
| simplification uh so they only they only |
|
|
| align:start position:0% |
| simplification uh so they only they only |
| |
|
|
| align:start position:0% |
| simplification uh so they only they only |
| start using these Actuarial |
|
|
| align:start position:0% |
| start using these Actuarial |
| |
|
|
| align:start position:0% |
| start using these Actuarial |
| tables uh after age 60 or 65 whatever |
|
|
| align:start position:0% |
| tables uh after age 60 or 65 whatever |
| |
|
|
| align:start position:0% |
| tables uh after age 60 or 65 whatever |
| they put in for retirement age uh so |
|
|
| align:start position:0% |
| they put in for retirement age uh so |
| |
|
|
| align:start position:0% |
| they put in for retirement age uh so |
| it's maximizing discounted expected |
|
|
| align:start position:0% |
| it's maximizing discounted expected |
| |
|
|
| align:start position:0% |
| it's maximizing discounted expected |
| utility common utility |
|
|
| align:start position:0% |
| utility common utility |
| |
|
|
| align:start position:0% |
| utility common utility |
| function we've been doing a lot of that |
|
|
| align:start position:0% |
| function we've been doing a lot of that |
| |
|
|
| align:start position:0% |
| function we've been doing a lot of that |
| too beta is the standard discount rate |
|
|
| align:start position:0% |
| too beta is the standard discount rate |
| |
|
|
| align:start position:0% |
| too beta is the standard discount rate |
| exceed is this you know you only get the |
|
|
| align:start position:0% |
| exceed is this you know you only get the |
| |
|
|
| align:start position:0% |
| exceed is this you know you only get the |
| utility if you're alive basically so |
|
|
| align:start position:0% |
| utility if you're alive basically so |
| |
|
|
| align:start position:0% |
| utility if you're alive basically so |
| that's a standard adjustment to the |
|
|
| align:start position:0% |
| that's a standard adjustment to the |
| |
|
|
| align:start position:0% |
| that's a standard adjustment to the |
| discount rate the income process is |
|
|
| align:start position:0% |
| discount rate the income process is |
| |
|
|
| align:start position:0% |
| discount rate the income process is |
| uh a bit complicated first of all |
|
|
| align:start position:0% |
| uh a bit complicated first of all |
| |
|
|
| align:start position:0% |
| uh a bit complicated first of all |
| there's a possible non-stochastic |
|
|
| align:start position:0% |
| there's a possible non-stochastic |
| |
|
|
| align:start position:0% |
| there's a possible non-stochastic |
| Trend uh sort of the deterministic part |
|
|
| align:start position:0% |
| Trend uh sort of the deterministic part |
| |
|
|
| align:start position:0% |
| Trend uh sort of the deterministic part |
| which could move income along with t and |
|
|
| align:start position:0% |
| which could move income along with t and |
| |
|
|
| align:start position:0% |
| which could move income along with t and |
| then you have income quote standard |
|
|
| align:start position:0% |
| then you have income quote standard |
| |
|
|
| align:start position:0% |
| then you have income quote standard |
| here's the decomposition income is equal |
|
|
| align:start position:0% |
| here's the decomposition income is equal |
| |
|
|
| align:start position:0% |
| here's the decomposition income is equal |
| to Z which is this permanent thing in |
|
|
| align:start position:0% |
| to Z which is this permanent thing in |
| |
|
|
| align:start position:0% |
| to Z which is this permanent thing in |
| this case entirely a random walk and |
|
|
| align:start position:0% |
| this case entirely a random walk and |
| |
|
|
| align:start position:0% |
| this case entirely a random walk and |
| Epsilon which is |
|
|
| align:start position:0% |
| Epsilon which is |
| |
|
|
| align:start position:0% |
| Epsilon which is |
| the IID transitory shock okay so these |
|
|
| align:start position:0% |
| the IID transitory shock okay so these |
| |
|
|
| align:start position:0% |
| the IID transitory shock okay so these |
| papers use different notation and this |
|
|
| align:start position:0% |
| papers use different notation and this |
| |
|
|
| align:start position:0% |
| papers use different notation and this |
| paper Z is permanent and Epsilon is |
|
|
| align:start position:0% |
| paper Z is permanent and Epsilon is |
| |
|
|
| align:start position:0% |
| paper Z is permanent and Epsilon is |
| transitory and Ada is another shock and |
|
|
| align:start position:0% |
| transitory and Ada is another shock and |
| |
|
|
| align:start position:0% |
| transitory and Ada is another shock and |
| that's the shock to permanent income |
|
|
| align:start position:0% |
| that's the shock to permanent income |
| |
|
|
| align:start position:0% |
| that's the shock to permanent income |
| basically you |
|
|
| align:start position:0% |
| basically you |
| |
|
|
| align:start position:0% |
| basically you |
| know so in expectation you expect your |
|
|
| align:start position:0% |
| know so in expectation you expect your |
| |
|
|
| align:start position:0% |
| know so in expectation you expect your |
| income to be what it was you expect the |
|
|
| align:start position:0% |
| income to be what it was you expect the |
| |
|
|
| align:start position:0% |
| income to be what it was you expect the |
| permanent part of your income to be |
|
|
| align:start position:0% |
| permanent part of your income to be |
| |
|
|
| align:start position:0% |
| permanent part of your income to be |
| exactly what it was last period but this |
|
|
| align:start position:0% |
| exactly what it was last period but this |
| |
|
|
| align:start position:0% |
| exactly what it was last period but this |
| thing will move move that |
|
|
| align:start position:0% |
| thing will move move that |
| |
|
|
| align:start position:0% |
| thing will move move that |
| around and then these have variances |
|
|
| align:start position:0% |
| around and then these have variances |
| |
|
|
| align:start position:0% |
| around and then these have variances |
| Sigma Ada Sigma |
|
|
| align:start position:0% |
| Sigma Ada Sigma |
| |
|
|
| align:start position:0% |
| Sigma Ada Sigma |
| Epsilon uh the budget constraint again |
|
|
| align:start position:0% |
| Epsilon uh the budget constraint again |
| |
|
|
| align:start position:0% |
| Epsilon uh the budget constraint again |
| is like this Bond Bond uh which you may |
|
|
| align:start position:0% |
| is like this Bond Bond uh which you may |
| |
|
|
| align:start position:0% |
| is like this Bond Bond uh which you may |
| or may not be able to short so you know |
|
|
| align:start position:0% |
| or may not be able to short so you know |
| |
|
|
| align:start position:0% |
| or may not be able to short so you know |
| you've got your assets from last |
|
|
| align:start position:0% |
| you've got your assets from last |
| |
|
|
| align:start position:0% |
| you've got your assets from last |
| period That's earning |
|
|
| align:start position:0% |
| period That's earning |
| |
|
|
| align:start position:0% |
| period That's earning |
| interest plus your income so this is |
|
|
| align:start position:0% |
| interest plus your income so this is |
| |
|
|
| align:start position:0% |
| interest plus your income so this is |
| like your disposable income which you |
|
|
| align:start position:0% |
| like your disposable income which you |
| |
|
|
| align:start position:0% |
| like your disposable income which you |
| can spend on |
|
|
| align:start position:0% |
| can spend on |
| |
|
|
| align:start position:0% |
| can spend on |
| consumption and assets going forward you |
|
|
| align:start position:0% |
| consumption and assets going forward you |
| |
|
|
| align:start position:0% |
| consumption and assets going forward you |
| know watch the subscripts of the jve you |
|
|
| align:start position:0% |
| know watch the subscripts of the jve you |
| |
|
|
| align:start position:0% |
| know watch the subscripts of the jve you |
| crazy it does me you know this is dated |
|
|
| align:start position:0% |
| crazy it does me you know this is dated |
| |
|
|
| align:start position:0% |
| crazy it does me you know this is dated |
| uh t plus one but it's decided on a t |
|
|
| align:start position:0% |
| uh t plus one but it's decided on a t |
| |
|
|
| align:start position:0% |
| uh t plus one but it's decided on a t |
| and consumption is also decided on a t |
|
|
| align:start position:0% |
| and consumption is also decided on a t |
| |
|
|
| align:start position:0% |
| and consumption is also decided on a t |
| so in some of these formulas you're |
|
|
| align:start position:0% |
| so in some of these formulas you're |
| |
|
|
| align:start position:0% |
| so in some of these formulas you're |
| going to see a mysterious interest rate |
|
|
| align:start position:0% |
| going to see a mysterious interest rate |
| |
|
|
| align:start position:0% |
| going to see a mysterious interest rate |
| adjustment and it has to do with you |
|
|
| align:start position:0% |
| adjustment and it has to do with you |
| |
|
|
| align:start position:0% |
| adjustment and it has to do with you |
| know this sort of Convention of the |
|
|
| align:start position:0% |
| know this sort of Convention of the |
| |
|
|
| align:start position:0% |
| know this sort of Convention of the |
| timing uh this looks the same except as |
|
|
| align:start position:0% |
| timing uh this looks the same except as |
| |
|
|
| align:start position:0% |
| timing uh this looks the same except as |
| I said it's like a pension fund in your |
|
|
| align:start position:0% |
| I said it's like a pension fund in your |
| |
|
|
| align:start position:0% |
| I said it's like a pension fund in your |
| assets so effectively you know this gets |
|
|
| align:start position:0% |
| assets so effectively you know this gets |
| |
|
|
| align:start position:0% |
| assets so effectively you know this gets |
| adjusted um you're it's not like |
|
|
| align:start position:0% |
| adjusted um you're it's not like |
| |
|
|
| align:start position:0% |
| adjusted um you're it's not like |
| everyone has their own individual |
|
|
| align:start position:0% |
| everyone has their own individual |
| |
|
|
| align:start position:0% |
| everyone has their own individual |
| retirement account which you draw down |
|
|
| align:start position:0% |
| retirement account which you draw down |
| |
|
|
| align:start position:0% |
| retirement account which you draw down |
| there's a pool of money there some |
|
|
| align:start position:0% |
| there's a pool of money there some |
| |
|
|
| align:start position:0% |
| there's a pool of money there some |
| people continue to live and some don't |
|
|
| align:start position:0% |
| people continue to live and some don't |
| |
|
|
| align:start position:0% |
| people continue to live and some don't |
| and so you know those in other words if |
|
|
| align:start position:0% |
| and so you know those in other words if |
| |
|
|
| align:start position:0% |
| and so you know those in other words if |
| you're quote lucky and you keep living |
|
|
| align:start position:0% |
| you're quote lucky and you keep living |
| |
|
|
| align:start position:0% |
| you're quote lucky and you keep living |
| you could actually draw more from the |
|
|
| align:start position:0% |
| you could actually draw more from the |
| |
|
|
| align:start position:0% |
| you could actually draw more from the |
| fund than your than what you put in |
|
|
| align:start position:0% |
| fund than your than what you put in |
| |
|
|
| align:start position:0% |
| fund than your than what you put in |
| there and and this is a very convenient |
|
|
| align:start position:0% |
| there and and this is a very convenient |
| |
|
|
| align:start position:0% |
| there and and this is a very convenient |
| way to kind of |
|
|
| align:start position:0% |
| way to kind of |
| |
|
|
| align:start position:0% |
| way to kind of |
| adjust |
|
|
| align:start position:0% |
| adjust |
| |
|
|
| align:start position:0% |
| adjust |
| um okay oh and if you're hired you get |
|
|
| align:start position:0% |
| um okay oh and if you're hired you get |
| |
|
|
| align:start position:0% |
| um okay oh and if you're hired you get |
| you know your Social Security |
|
|
| align:start position:0% |
| you know your Social Security |
| |
|
|
| align:start position:0% |
| you know your Social Security |
| benefits uh they're going to put some |
|
|
| align:start position:0% |
| benefits uh they're going to put some |
| |
|
|
| align:start position:0% |
| benefits uh they're going to put some |
| numbers in here from the life cycle |
|
|
| align:start position:0% |
| numbers in here from the life cycle |
| |
|
|
| align:start position:0% |
| numbers in here from the life cycle |
| literature and other sources uh using |
|
|
| align:start position:0% |
| literature and other sources uh using |
| |
|
|
| align:start position:0% |
| literature and other sources uh using |
| various you know us data sets and I'm |
|
|
| align:start position:0% |
| various you know us data sets and I'm |
| |
|
|
| align:start position:0% |
| various you know us data sets and I'm |
| not going to dwell on the numbers but |
|
|
| align:start position:0% |
| not going to dwell on the numbers but |
| |
|
|
| align:start position:0% |
| not going to dwell on the numbers but |
| this is a classic |
|
|
| align:start position:0% |
| this is a classic |
| |
|
|
| align:start position:0% |
| this is a classic |
| picture of the life |
|
|
| align:start position:0% |
| picture of the life |
| |
|
|
| align:start position:0% |
| picture of the life |
| cycle |
|
|
| align:start position:0% |
| cycle |
| |
|
|
| align:start position:0% |
| cycle |
| so here are the |
|
|
| align:start position:0% |
| so here are the |
| |
|
|
| align:start position:0% |
| so here are the |
| earnings going up you guys are down here |
|
|
| align:start position:0% |
| earnings going up you guys are down here |
| |
|
|
| align:start position:0% |
| earnings going up you guys are down here |
| somewhere |
|
|
| align:start position:0% |
| somewhere |
| |
|
|
| align:start position:0% |
| somewhere |
| uh on average you you can expect to do |
|
|
| align:start position:0% |
| uh on average you you can expect to do |
| |
|
|
| align:start position:0% |
| uh on average you you can expect to do |
| better |
|
|
| align:start position:0% |
| better |
| |
|
|
| align:start position:0% |
| better |
| eventually uh and then you you get to be |
|
|
| align:start position:0% |
| eventually uh and then you you get to be |
| |
|
|
| align:start position:0% |
| eventually uh and then you you get to be |
| 60 and it doesn't go to zero that's if |
|
|
| align:start position:0% |
| 60 and it doesn't go to zero that's if |
| |
|
|
| align:start position:0% |
| 60 and it doesn't go to zero that's if |
| you were a US citizen that's where you |
|
|
| align:start position:0% |
| you were a US citizen that's where you |
| |
|
|
| align:start position:0% |
| you were a US citizen that's where you |
| start drawing well actually it's you |
|
|
| align:start position:0% |
| start drawing well actually it's you |
| |
|
|
| align:start position:0% |
| start drawing well actually it's you |
| just be an immigrant you start drawing |
|
|
| align:start position:0% |
| just be an immigrant you start drawing |
| |
|
|
| align:start position:0% |
| just be an immigrant you start drawing |
| uh Social Security benefits now with |
|
|
| align:start position:0% |
| uh Social Security benefits now with |
| |
|
|
| align:start position:0% |
| uh Social Security benefits now with |
| this profile you try to keep consumption |
|
|
| align:start position:0% |
| this profile you try to keep consumption |
| |
|
|
| align:start position:0% |
| this profile you try to keep consumption |
| steady |
|
|
| align:start position:0% |
| steady |
| |
|
|
| align:start position:0% |
| steady |
| you know now it's not completely flat it |
|
|
| align:start position:0% |
| you know now it's not completely flat it |
| |
|
|
| align:start position:0% |
| you know now it's not completely flat it |
| just looks flat relative to everything |
|
|
| align:start position:0% |
| just looks flat relative to everything |
| |
|
|
| align:start position:0% |
| just looks flat relative to everything |
| else on this diagram it's it's actually |
|
|
| align:start position:0% |
| else on this diagram it's it's actually |
| |
|
|
| align:start position:0% |
| else on this diagram it's it's actually |
| increasing somewhat um but but you know |
|
|
| align:start position:0% |
| increasing somewhat um but but you know |
| |
|
|
| align:start position:0% |
| increasing somewhat um but but you know |
| the goal of the life cycle smoothing is |
|
|
| align:start position:0% |
| the goal of the life cycle smoothing is |
| |
|
|
| align:start position:0% |
| the goal of the life cycle smoothing is |
| to is to try to have more or less steady |
|
|
| align:start position:0% |
| to is to try to have more or less steady |
| |
|
|
| align:start position:0% |
| to is to try to have more or less steady |
| consumption |
|
|
| align:start position:0% |
| consumption |
| |
|
|
| align:start position:0% |
| consumption |
| um now again this is there's two lines |
|
|
| align:start position:0% |
| um now again this is there's two lines |
| |
|
|
| align:start position:0% |
| um now again this is there's two lines |
| here there's a natural borrowing |
|
|
| align:start position:0% |
| here there's a natural borrowing |
| |
|
|
| align:start position:0% |
| here there's a natural borrowing |
| constraint and a zero borrowing |
|
|
| align:start position:0% |
| constraint and a zero borrowing |
| |
|
|
| align:start position:0% |
| constraint and a zero borrowing |
| constraint doesn't make too much |
|
|
| align:start position:0% |
| constraint doesn't make too much |
| |
|
|
| align:start position:0% |
| constraint doesn't make too much |
| different for consumption |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um I guess here the zero borrowing |
|
|
| align:start position:0% |
| um I guess here the zero borrowing |
| |
|
|
| align:start position:0% |
| um I guess here the zero borrowing |
| constraint looks more constraining so |
|
|
| align:start position:0% |
| constraint looks more constraining so |
| |
|
|
| align:start position:0% |
| constraint looks more constraining so |
| when you're young you know expecting on |
|
|
| align:start position:0% |
| when you're young you know expecting on |
| |
|
|
| align:start position:0% |
| when you're young you know expecting on |
| average higher future income you might |
|
|
| align:start position:0% |
| average higher future income you might |
| |
|
|
| align:start position:0% |
| average higher future income you might |
| want to borrow against that uh and repay |
|
|
| align:start position:0% |
| want to borrow against that uh and repay |
| |
|
|
| align:start position:0% |
| want to borrow against that uh and repay |
| the debt later but you hit one or the |
|
|
| align:start position:0% |
| the debt later but you hit one or the |
| |
|
|
| align:start position:0% |
| the debt later but you hit one or the |
| other of these constraints so you can't |
|
|
| align:start position:0% |
| other of these constraints so you can't |
| |
|
|
| align:start position:0% |
| other of these constraints so you can't |
| do that too much of course |
|
|
| align:start position:0% |
| do that too much of course |
| |
|
|
| align:start position:0% |
| do that too much of course |
| the the gorilla in the room is uh is |
|
|
| align:start position:0% |
| the the gorilla in the room is uh is |
| |
|
|
| align:start position:0% |
| the the gorilla in the room is uh is |
| this wealth profile and that's where all |
|
|
| align:start position:0% |
| this wealth profile and that's where all |
| |
|
|
| align:start position:0% |
| this wealth profile and that's where all |
| the action is basically you know in fact |
|
|
| align:start position:0% |
| the action is basically you know in fact |
| |
|
|
| align:start position:0% |
| the action is basically you know in fact |
| um you you're basically over the life |
|
|
| align:start position:0% |
| um you you're basically over the life |
| |
|
|
| align:start position:0% |
| um you you're basically over the life |
| cycle accumulating and then de |
|
|
| align:start position:0% |
| cycle accumulating and then de |
| |
|
|
| align:start position:0% |
| cycle accumulating and then de |
| accumulating wealth you know that's what |
|
|
| align:start position:0% |
| accumulating wealth you know that's what |
| |
|
|
| align:start position:0% |
| accumulating wealth you know that's what |
| that's what's keeping consumption steady |
|
|
| align:start position:0% |
| that's what's keeping consumption steady |
| |
|
|
| align:start position:0% |
| that's what's keeping consumption steady |
| you remember when income goes to |
|
|
| align:start position:0% |
| you remember when income goes to |
| |
|
|
| align:start position:0% |
| you remember when income goes to |
| virtually zero apart from Social |
|
|
| align:start position:0% |
| virtually zero apart from Social |
| |
|
|
| align:start position:0% |
| virtually zero apart from Social |
| Security you've got to live off the |
|
|
| align:start position:0% |
| Security you've got to live off the |
| |
|
|
| align:start position:0% |
| Security you've got to live off the |
| interest in your uh either you know you |
|
|
| align:start position:0% |
| interest in your uh either you know you |
| |
|
|
| align:start position:0% |
| interest in your uh either you know you |
| have Social Security Plus the adjusted |
|
|
| align:start position:0% |
| have Social Security Plus the adjusted |
| |
|
|
| align:start position:0% |
| have Social Security Plus the adjusted |
| Actuarial interest off the pension fund |
|
|
| align:start position:0% |
| Actuarial interest off the pension fund |
| |
|
|
| align:start position:0% |
| Actuarial interest off the pension fund |
| and that's typically a lot smaller flow |
|
|
| align:start position:0% |
| and that's typically a lot smaller flow |
| |
|
|
| align:start position:0% |
| and that's typically a lot smaller flow |
| than was your previous income so you |
|
|
| align:start position:0% |
| than was your previous income so you |
| |
|
|
| align:start position:0% |
| than was your previous income so you |
| need a a ton of assets to be able to you |
|
|
| align:start position:0% |
| need a a ton of assets to be able to you |
| |
|
|
| align:start position:0% |
| need a a ton of assets to be able to you |
| know survive into old age this has run |
|
|
| align:start position:0% |
| know survive into old age this has run |
| |
|
|
| align:start position:0% |
| know survive into old age this has run |
| out looks like to 90 something |
|
|
| align:start position:0% |
| out looks like to 90 something |
| |
|
|
| align:start position:0% |
| out looks like to 90 something |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um now oh so that you know that could |
|
|
| align:start position:0% |
| um now oh so that you know that could |
| |
|
|
| align:start position:0% |
| um now oh so that you know that could |
| have been shown first but that's kind of |
|
|
| align:start position:0% |
| have been shown first but that's kind of |
| |
|
|
| align:start position:0% |
| have been shown first but that's kind of |
| a summary of the life cycle model and |
|
|
| align:start position:0% |
| a summary of the life cycle model and |
| |
|
|
| align:start position:0% |
| a summary of the life cycle model and |
| and what Kaplan and viante are are doing |
|
|
| align:start position:0% |
| and what Kaplan and viante are are doing |
| |
|
|
| align:start position:0% |
| and what Kaplan and viante are are doing |
| and they're generating these smoothing |
|
|
| align:start position:0% |
| and they're generating these smoothing |
| |
|
|
| align:start position:0% |
| and they're generating these smoothing |
| statistics uh |
|
|
| align:start position:0% |
| statistics uh |
| |
|
|
| align:start position:0% |
| statistics uh |
| from date by date with shocks you know |
|
|
| align:start position:0% |
| from date by date with shocks you know |
| |
|
|
| align:start position:0% |
| from date by date with shocks you know |
| but this is the overall pattern you |
|
|
| align:start position:0% |
| but this is the overall pattern you |
| |
|
|
| align:start position:0% |
| but this is the overall pattern you |
| would see now let's go to Deon and |
|
|
| align:start position:0% |
| would see now let's go to Deon and |
| |
|
|
| align:start position:0% |
| would see now let's go to Deon and |
| Paxon for a very different look at it |
|
|
| align:start position:0% |
| Paxon for a very different look at it |
| |
|
|
| align:start position:0% |
| Paxon for a very different look at it |
| through the lens of these |
|
|
| align:start position:0% |
| through the lens of these |
| |
|
|
| align:start position:0% |
| through the lens of these |
| cross-sections |
|
|
| align:start position:0% |
| cross-sections |
| |
|
|
| align:start position:0% |
| cross-sections |
| um starting point again is that with a |
|
|
| align:start position:0% |
| um starting point again is that with a |
| |
|
|
| align:start position:0% |
| um starting point again is that with a |
| permanent income hypothesis |
|
|
| align:start position:0% |
| permanent income hypothesis |
| |
|
|
| align:start position:0% |
| permanent income hypothesis |
| consumption of each person should |
|
|
| align:start position:0% |
| consumption of each person should |
| |
|
|
| align:start position:0% |
| consumption of each person should |
| basically follow a random |
|
|
| align:start position:0% |
| basically follow a random |
| |
|
|
| align:start position:0% |
| basically follow a random |
| walk uh yeah again the idea is you |
|
|
| align:start position:0% |
| walk uh yeah again the idea is you |
| |
|
|
| align:start position:0% |
| walk uh yeah again the idea is you |
| should you could you should Bas |
|
|
| align:start position:0% |
| should you could you should Bas |
| |
|
|
| align:start position:0% |
| should you could you should Bas |
| basically be eating at the level of your |
|
|
| align:start position:0% |
| basically be eating at the level of your |
| |
|
|
| align:start position:0% |
| basically be eating at the level of your |
| permanent income and uh and when your |
|
|
| align:start position:0% |
| permanent income and uh and when your |
| |
|
|
| align:start position:0% |
| permanent income and uh and when your |
| permanent income is shocked then your |
|
|
| align:start position:0% |
| permanent income is shocked then your |
| |
|
|
| align:start position:0% |
| permanent income is shocked then your |
| consumption is |
|
|
| align:start position:0% |
| consumption is |
| |
|
|
| align:start position:0% |
| consumption is |
| shocked |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um but the implication that consumption |
|
|
| align:start position:0% |
| um but the implication that consumption |
| |
|
|
| align:start position:0% |
| um but the implication that consumption |
| follow was a random walk you know means |
|
|
| align:start position:0% |
| follow was a random walk you know means |
| |
|
|
| align:start position:0% |
| follow was a random walk you know means |
| basically you'll see the equations for |
|
|
| align:start position:0% |
| basically you'll see the equations for |
| |
|
|
| align:start position:0% |
| basically you'll see the equations for |
| it uh date by datee by date you you know |
|
|
| align:start position:0% |
| it uh date by datee by date you you know |
| |
|
|
| align:start position:0% |
| it uh date by datee by date you you know |
| you get hit with positive or negative |
|
|
| align:start position:0% |
| you get hit with positive or negative |
| |
|
|
| align:start position:0% |
| you get hit with positive or negative |
| shocks and their IID so basically you |
|
|
| align:start position:0% |
| shocks and their IID so basically you |
| |
|
|
| align:start position:0% |
| shocks and their IID so basically you |
| know some people have their ups and |
|
|
| align:start position:0% |
| know some people have their ups and |
| |
|
|
| align:start position:0% |
| know some people have their ups and |
| other people have their downs so you |
|
|
| align:start position:0% |
| other people have their downs so you |
| |
|
|
| align:start position:0% |
| other people have their downs so you |
| start getting this Fanning out and then |
|
|
| align:start position:0% |
| start getting this Fanning out and then |
| |
|
|
| align:start position:0% |
| start getting this Fanning out and then |
| you go then you take the cohort that is |
|
|
| align:start position:0% |
| you go then you take the cohort that is |
| |
|
|
| align:start position:0% |
| you go then you take the cohort that is |
| still all alike go one more period they |
|
|
| align:start position:0% |
| still all alike go one more period they |
| |
|
|
| align:start position:0% |
| still all alike go one more period they |
| have ups and downs those guys fan out a |
|
|
| align:start position:0% |
| have ups and downs those guys fan out a |
| |
|
|
| align:start position:0% |
| have ups and downs those guys fan out a |
| a bit so you know the the |
|
|
| align:start position:0% |
| a bit so you know the the |
| |
|
|
| align:start position:0% |
| a bit so you know the the |
| cross-sectional distribution just keeps |
|
|
| align:start position:0% |
| cross-sectional distribution just keeps |
| |
|
|
| align:start position:0% |
| cross-sectional distribution just keeps |
| getting fatter and fatter with bigger |
|
|
| align:start position:0% |
| getting fatter and fatter with bigger |
| |
|
|
| align:start position:0% |
| getting fatter and fatter with bigger |
| and bigger |
|
|
| align:start position:0% |
| and bigger |
| |
|
|
| align:start position:0% |
| and bigger |
| Tails um |
|
|
| align:start position:0% |
| Tails um |
| |
|
|
| align:start position:0% |
| Tails um |
| so all of the slides basically are going |
|
|
| align:start position:0% |
| so all of the slides basically are going |
| |
|
|
| align:start position:0% |
| so all of the slides basically are going |
| to be |
|
|
| align:start position:0% |
| to be |
| |
|
|
| align:start position:0% |
| to be |
| about this increasing consumption |
|
|
| align:start position:0% |
| about this increasing consumption |
| |
|
|
| align:start position:0% |
| about this increasing consumption |
| inequality in the cross-section say |
|
|
| align:start position:0% |
| inequality in the cross-section say |
| |
|
|
| align:start position:0% |
| inequality in the cross-section say |
| measured by the standard deviation of |
|
|
| align:start position:0% |
| measured by the standard deviation of |
| |
|
|
| align:start position:0% |
| measured by the standard deviation of |
| the log of |
|
|
| align:start position:0% |
| the log of |
| |
|
|
| align:start position:0% |
| the log of |
| consumption age group by age |
|
|
| align:start position:0% |
| consumption age group by age |
| |
|
|
| align:start position:0% |
| consumption age group by age |
| group uh |
|
|
| align:start position:0% |
| group uh |
| |
|
|
| align:start position:0% |
| group uh |
| but again if you thought about full risk |
|
|
| align:start position:0% |
| but again if you thought about full risk |
| |
|
|
| align:start position:0% |
| but again if you thought about full risk |
| sharing |
|
|
| align:start position:0% |
| sharing |
| |
|
|
| align:start position:0% |
| sharing |
| um you get this dramatic |
|
|
| align:start position:0% |
| um you get this dramatic |
| |
|
|
| align:start position:0% |
| um you get this dramatic |
| contrast you know at least for the cases |
|
|
| align:start position:0% |
| contrast you know at least for the cases |
| |
|
|
| align:start position:0% |
| contrast you know at least for the cases |
| where people have uniform risk aversion |
|
|
| align:start position:0% |
| where people have uniform risk aversion |
| |
|
|
| align:start position:0% |
| where people have uniform risk aversion |
| and so on then we know that what pins |
|
|
| align:start position:0% |
| and so on then we know that what pins |
| |
|
|
| align:start position:0% |
| and so on then we know that what pins |
| down the level of your consumption on |
|
|
| align:start position:0% |
| down the level of your consumption on |
| |
|
|
| align:start position:0% |
| down the level of your consumption on |
| average is going to be your paral weight |
|
|
| align:start position:0% |
| average is going to be your paral weight |
| |
|
|
| align:start position:0% |
| average is going to be your paral weight |
| and you kind of have those fixed at T |
|
|
| align:start position:0% |
| and you kind of have those fixed at T |
| |
|
|
| align:start position:0% |
| and you kind of have those fixed at T |
| equals z that's going to fix the |
|
|
| align:start position:0% |
| equals z that's going to fix the |
| |
|
|
| align:start position:0% |
| equals z that's going to fix the |
| intercepts and you know your consumption |
|
|
| align:start position:0% |
| intercepts and you know your consumption |
| |
|
|
| align:start position:0% |
| intercepts and you know your consumption |
| might fluctuate with aggregate shocks |
|
|
| align:start position:0% |
| might fluctuate with aggregate shocks |
| |
|
|
| align:start position:0% |
| might fluctuate with aggregate shocks |
| around that but it's not going to move |
|
|
| align:start position:0% |
| around that but it's not going to move |
| |
|
|
| align:start position:0% |
| around that but it's not going to move |
| with age or anything else so basically |
|
|
| align:start position:0% |
| with age or anything else so basically |
| |
|
|
| align:start position:0% |
| with age or anything else so basically |
| the cross-sectional dispersion of |
|
|
| align:start position:0% |
| the cross-sectional dispersion of |
| |
|
|
| align:start position:0% |
| the cross-sectional dispersion of |
| consumption does not increase in the |
|
|
| align:start position:0% |
| consumption does not increase in the |
| |
|
|
| align:start position:0% |
| consumption does not increase in the |
| full risk sharing model but you'll see |
|
|
| align:start position:0% |
| full risk sharing model but you'll see |
| |
|
|
| align:start position:0% |
| full risk sharing model but you'll see |
| that in the |
|
|
| align:start position:0% |
| that in the |
| |
|
|
| align:start position:0% |
| that in the |
| data uh depending on the country it does |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| happen uh now you have to be a little |
|
|
| align:start position:0% |
| happen uh now you have to be a little |
| |
|
|
| align:start position:0% |
| happen uh now you have to be a little |
| mindful |
|
|
| align:start position:0% |
| mindful |
| |
|
|
| align:start position:0% |
| mindful |
| of going back back and forth between |
|
|
| align:start position:0% |
| of going back back and forth between |
| |
|
|
| align:start position:0% |
| of going back back and forth between |
| this |
|
|
| align:start position:0% |
| this |
| |
|
|
| align:start position:0% |
| this |
| cross-sectional age dependent inequality |
|
|
| align:start position:0% |
| cross-sectional age dependent inequality |
| |
|
|
| align:start position:0% |
| cross-sectional age dependent inequality |
| and inequality for the economy as a |
|
|
| align:start position:0% |
| and inequality for the economy as a |
| |
|
|
| align:start position:0% |
| and inequality for the economy as a |
| whole |
|
|
| align:start position:0% |
| whole |
| |
|
|
| align:start position:0% |
| whole |
| uh because demographics can shift you |
|
|
| align:start position:0% |
| uh because demographics can shift you |
| |
|
|
| align:start position:0% |
| uh because demographics can shift you |
| know even if you give me someone's age |
|
|
| align:start position:0% |
| know even if you give me someone's age |
| |
|
|
| align:start position:0% |
| know even if you give me someone's age |
| and I'll tell you sort of what the |
|
|
| align:start position:0% |
| and I'll tell you sort of what the |
| |
|
|
| align:start position:0% |
| and I'll tell you sort of what the |
| cross-sectional dispersion is in the |
|
|
| align:start position:0% |
| cross-sectional dispersion is in the |
| |
|
|
| align:start position:0% |
| cross-sectional dispersion is in the |
| population when you have D demographics |
|
|
| align:start position:0% |
| population when you have D demographics |
| |
|
|
| align:start position:0% |
| population when you have D demographics |
| going on you may have an increasing |
|
|
| align:start position:0% |
| going on you may have an increasing |
| |
|
|
| align:start position:0% |
| going on you may have an increasing |
| number of young people or old people |
|
|
| align:start position:0% |
| number of young people or old people |
| |
|
|
| align:start position:0% |
| number of young people or old people |
| depending on the economy so you're |
|
|
| align:start position:0% |
| depending on the economy so you're |
| |
|
|
| align:start position:0% |
| depending on the economy so you're |
| basically taking an age weighted average |
|
|
| align:start position:0% |
| basically taking an age weighted average |
| |
|
|
| align:start position:0% |
| basically taking an age weighted average |
| as the demographic shift and that will |
|
|
| align:start position:0% |
| as the demographic shift and that will |
| |
|
|
| align:start position:0% |
| as the demographic shift and that will |
| shift in equality so an issue in this |
|
|
| align:start position:0% |
| shift in equality so an issue in this |
| |
|
|
| align:start position:0% |
| shift in equality so an issue in this |
| literature is how much of aggregate |
|
|
| align:start position:0% |
| literature is how much of aggregate |
| |
|
|
| align:start position:0% |
| literature is how much of aggregate |
| inequality can be explained by these |
|
|
| align:start position:0% |
| inequality can be explained by these |
| |
|
|
| align:start position:0% |
| inequality can be explained by these |
| kinds |
|
|
| align:start position:0% |
| kinds |
| |
|
|
| align:start position:0% |
| kinds |
| of life cycle smoothing considerations |
|
|
| align:start position:0% |
| of life cycle smoothing considerations |
| |
|
|
| align:start position:0% |
| of life cycle smoothing considerations |
| and how much |
|
|
| align:start position:0% |
| and how much |
| |
|
|
| align:start position:0% |
| and how much |
| by uh you know baby booms versus uh |
|
|
| align:start position:0% |
| by uh you know baby booms versus uh |
| |
|
|
| align:start position:0% |
| by uh you know baby booms versus uh |
| fertility drops and all of |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| that |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so this is kind of nice because they |
|
|
| align:start position:0% |
| so this is kind of nice because they |
| |
|
|
| align:start position:0% |
| so this is kind of nice because they |
| have the US Britain and Taiwan uh where |
|
|
| align:start position:0% |
| have the US Britain and Taiwan uh where |
| |
|
|
| align:start position:0% |
| have the US Britain and Taiwan uh where |
| which are three countries that have |
|
|
| align:start position:0% |
| which are three countries that have |
| |
|
|
| align:start position:0% |
| which are three countries that have |
| quite ample amount of |
|
|
| align:start position:0% |
| quite ample amount of |
| |
|
|
| align:start position:0% |
| quite ample amount of |
| cross-sectional consumption for that |
|
|
| align:start position:0% |
| cross-sectional consumption for that |
| |
|
|
| align:start position:0% |
| cross-sectional consumption for that |
| matter also income |
|
|
| align:start position:0% |
| matter also income |
| |
|
|
| align:start position:0% |
| matter also income |
| data uh they're going to use |
|
|
| align:start position:0% |
| data uh they're going to use |
| |
|
|
| align:start position:0% |
| data uh they're going to use |
| 47 annual surveys spread out over the |
|
|
| align:start position:0% |
| 47 annual surveys spread out over the |
| |
|
|
| align:start position:0% |
| 47 annual surveys spread out over the |
| three |
|
|
| align:start position:0% |
| three |
| |
|
|
| align:start position:0% |
| three |
| countries and look at the implications |
|
|
| align:start position:0% |
| countries and look at the implications |
| |
|
|
| align:start position:0% |
| countries and look at the implications |
| of these models for |
|
|
| align:start position:0% |
| of these models for |
| |
|
|
| align:start position:0% |
| of these models for |
| the kind of cross-sectional inequality |
|
|
| align:start position:0% |
| the kind of cross-sectional inequality |
| |
|
|
| align:start position:0% |
| the kind of cross-sectional inequality |
| and see what it takes to to explain it |
|
|
| align:start position:0% |
| and see what it takes to to explain it |
| |
|
|
| align:start position:0% |
| and see what it takes to to explain it |
| so how does this work exactly |
|
|
| align:start position:0% |
| so how does this work exactly |
| |
|
|
| align:start position:0% |
| so how does this work exactly |
| um so we want to follow cohort cohorts |
|
|
| align:start position:0% |
| um so we want to follow cohort cohorts |
| |
|
|
| align:start position:0% |
| um so we want to follow cohort cohorts |
| over time we cannot follow an individual |
|
|
| align:start position:0% |
| over time we cannot follow an individual |
| |
|
|
| align:start position:0% |
| over time we cannot follow an individual |
| person over time because it's not panel |
|
|
| align:start position:0% |
| person over time because it's not panel |
| |
|
|
| align:start position:0% |
| person over time because it's not panel |
| data but you make the assumption that uh |
|
|
| align:start position:0% |
| data but you make the assumption that uh |
| |
|
|
| align:start position:0% |
| data but you make the assumption that uh |
| that for example if you see a bunch of |
|
|
| align:start position:0% |
| that for example if you see a bunch of |
| |
|
|
| align:start position:0% |
| that for example if you see a bunch of |
| 31y olds in 1976 in |
|
|
| align:start position:0% |
| 31y olds in 1976 in |
| |
|
|
| align:start position:0% |
| 31y olds in 1976 in |
| Taiwan |
|
|
| align:start position:0% |
| Taiwan |
| |
|
|
| align:start position:0% |
| Taiwan |
| uh uh you're you're getting a good |
|
|
| align:start position:0% |
| uh uh you're you're getting a good |
| |
|
|
| align:start position:0% |
| uh uh you're you're getting a good |
| summary statistic of the cross-sectional |
|
|
| align:start position:0% |
| summary statistic of the cross-sectional |
| |
|
|
| align:start position:0% |
| summary statistic of the cross-sectional |
| dispersion of their consumption in 1976 |
|
|
| align:start position:0% |
| dispersion of their consumption in 1976 |
| |
|
|
| align:start position:0% |
| dispersion of their consumption in 1976 |
| and then you go to 1977 and they are now |
|
|
| align:start position:0% |
| and then you go to 1977 and they are now |
| |
|
|
| align:start position:0% |
| and then you go to 1977 and they are now |
| 32 actually they isn't quite correct |
|
|
| align:start position:0% |
| 32 actually they isn't quite correct |
| |
|
|
| align:start position:0% |
| 32 actually they isn't quite correct |
| because it's a different set of people |
|
|
| align:start position:0% |
| because it's a different set of people |
| |
|
|
| align:start position:0% |
| because it's a different set of people |
| but again you hope you have enough of |
|
|
| align:start position:0% |
| but again you hope you have enough of |
| |
|
|
| align:start position:0% |
| but again you hope you have enough of |
| them and that there the basic |
|
|
| align:start position:0% |
| them and that there the basic |
| |
|
|
| align:start position:0% |
| them and that there the basic |
| assumptions are |
|
|
| align:start position:0% |
| assumptions are |
| |
|
|
| align:start position:0% |
| assumptions are |
| correct uh that you can take these kinds |
|
|
| align:start position:0% |
| correct uh that you can take these kinds |
| |
|
|
| align:start position:0% |
| correct uh that you can take these kinds |
| of |
|
|
| align:start position:0% |
| of |
| |
|
|
| align:start position:0% |
| of |
| statistics as representative of what |
|
|
| align:start position:0% |
| statistics as representative of what |
| |
|
|
| align:start position:0% |
| statistics as representative of what |
| would you would have seen if you could |
|
|
| align:start position:0% |
| would you would have seen if you could |
| |
|
|
| align:start position:0% |
| would you would have seen if you could |
| have been able to continue to track the |
|
|
| align:start position:0% |
| have been able to continue to track the |
| |
|
|
| align:start position:0% |
| have been able to continue to track the |
| same |
|
|
| align:start position:0% |
| same |
| |
|
|
| align:start position:0% |
| same |
| people |
|
|
| align:start position:0% |
| people |
| |
|
|
| align:start position:0% |
| people |
| um some people actually think this is |
|
|
| align:start position:0% |
| um some people actually think this is |
| |
|
|
| align:start position:0% |
| um some people actually think this is |
| better than panel data in the sense that |
|
|
| align:start position:0% |
| better than panel data in the sense that |
| |
|
|
| align:start position:0% |
| better than panel data in the sense that |
| you don't have to worry about people |
|
|
| align:start position:0% |
| you don't have to worry about people |
| |
|
|
| align:start position:0% |
| you don't have to worry about people |
| dropping out and the data becomes |
|
|
| align:start position:0% |
| dropping out and the data becomes |
| |
|
|
| align:start position:0% |
| dropping out and the data becomes |
| unrepresentative and there is some truth |
|
|
| align:start position:0% |
| unrepresentative and there is some truth |
| |
|
|
| align:start position:0% |
| unrepresentative and there is some truth |
| to that |
|
|
| align:start position:0% |
| to that |
| |
|
|
| align:start position:0% |
| to that |
| um there are issues about whether the |
|
|
| align:start position:0% |
| um there are issues about whether the |
| |
|
|
| align:start position:0% |
| um there are issues about whether the |
| data are coming from households or |
|
|
| align:start position:0% |
| data are coming from households or |
| |
|
|
| align:start position:0% |
| data are coming from households or |
| individuals you have to make some |
|
|
| align:start position:0% |
| individuals you have to make some |
| |
|
|
| align:start position:0% |
| individuals you have to make some |
| adjustments for household |
|
|
| align:start position:0% |
| adjustments for household |
| |
|
|
| align:start position:0% |
| adjustments for household |
| composition and the surveys being used |
|
|
| align:start position:0% |
| composition and the surveys being used |
| |
|
|
| align:start position:0% |
| composition and the surveys being used |
| here are the personal income |
|
|
| align:start position:0% |
| here are the personal income |
| |
|
|
| align:start position:0% |
| here are the personal income |
| distribution survey in Taiwan the |
|
|
| align:start position:0% |
| distribution survey in Taiwan the |
| |
|
|
| align:start position:0% |
| distribution survey in Taiwan the |
| consumer expenditure survey in the US |
|
|
| align:start position:0% |
| consumer expenditure survey in the US |
| |
|
|
| align:start position:0% |
| consumer expenditure survey in the US |
| that's the same one we've referred to |
|
|
| align:start position:0% |
| that's the same one we've referred to |
| |
|
|
| align:start position:0% |
| that's the same one we've referred to |
| before and this family expenditure |
|
|
| align:start position:0% |
| before and this family expenditure |
| |
|
|
| align:start position:0% |
| before and this family expenditure |
| survey in Great Britain |
|
|
| align:start position:0% |
| survey in Great Britain |
| |
|
|
| align:start position:0% |
| survey in Great Britain |
| so takes a bit of staring to get used to |
|
|
| align:start position:0% |
| so takes a bit of staring to get used to |
| |
|
|
| align:start position:0% |
| so takes a bit of staring to get used to |
| this but so we start out with people who |
|
|
| align:start position:0% |
| this but so we start out with people who |
| |
|
|
| align:start position:0% |
| this but so we start out with people who |
| are age 15 and 19 |
|
|
| align:start position:0% |
| are age 15 and 19 |
| |
|
|
| align:start position:0% |
| are age 15 and 19 |
|
|
| align:start position:0% |
| |
|
|
| align:start position:0% |
| um and they kind of start here in |
|
|
| align:start position:0% |
| um and they kind of start here in |
| |
|
|
| align:start position:0% |
| um and they kind of start here in |
| calendar time in know 1982 or something |
|
|
| align:start position:0% |
| calendar time in know 1982 or something |
| |
|
|
| align:start position:0% |
| calendar time in know 1982 or something |
| like that now again we don't track the |
|
|
| align:start position:0% |
| like that now again we don't track the |
| |
|
|
| align:start position:0% |
| like that now again we don't track the |
| same people but we can look what |
|
|
| align:start position:0% |
| same people but we can look what |
| |
|
|
| align:start position:0% |
| same people but we can look what |
| happens this paper is not the most |
|
|
| align:start position:0% |
| happens this paper is not the most |
| |
|
|
| align:start position:0% |
| happens this paper is not the most |
| recent thing in the world it's just a |
|
|
| align:start position:0% |
| recent thing in the world it's just a |
| |
|
|
| align:start position:0% |
| recent thing in the world it's just a |
| really nice one so they basically |
|
|
| align:start position:0% |
| really nice one so they basically |
| |
|
|
| align:start position:0% |
| really nice one so they basically |
| stopped using data after 1990 so we go |
|
|
| align:start position:0% |
| stopped using data after 1990 so we go |
| |
|
|
| align:start position:0% |
| stopped using data after 1990 so we go |
| back to you know uh the 1976 survey all |
|
|
| align:start position:0% |
| back to you know uh the 1976 survey all |
| |
|
|
| align:start position:0% |
| back to you know uh the 1976 survey all |
| the way up to the 1990 survey with |
|
|
| align:start position:0% |
| the way up to the 1990 survey with |
| |
|
|
| align:start position:0% |
| the way up to the 1990 survey with |
| repeated cross-sections and looking what |
|
|
| align:start position:0% |
| repeated cross-sections and looking what |
| |
|
|
| align:start position:0% |
| repeated cross-sections and looking what |
| happens to inequality in this |
|
|
| align:start position:0% |
| happens to inequality in this |
| |
|
|
| align:start position:0% |
| happens to inequality in this |
| cohort as they age now you know these |
|
|
| align:start position:0% |
| cohort as they age now you know these |
| |
|
|
| align:start position:0% |
| cohort as they age now you know these |
| guys were 15 these these guys were 20 in |
|
|
| align:start position:0% |
| guys were 15 these these guys were 20 in |
| |
|
|
| align:start position:0% |
| guys were 15 these these guys were 20 in |
| 1976 so they start older and they're |
|
|
| align:start position:0% |
| 1976 so they start older and they're |
| |
|
|
| align:start position:0% |
| 1976 so they start older and they're |
| going to end a bit older and and then |
|
|
| align:start position:0% |
| going to end a bit older and and then |
| |
|
|
| align:start position:0% |
| going to end a bit older and and then |
| you keep going |
|
|
| align:start position:0% |
| you keep going |
| |
|
|
| align:start position:0% |
| you keep going |
| here uh you know to the Aged 55 people |
|
|
| align:start position:0% |
| here uh you know to the Aged 55 people |
| |
|
|
| align:start position:0% |
| here uh you know to the Aged 55 people |
| in 1976 and so on now you know these are |
|
|
| align:start position:0% |
| in 1976 and so on now you know these are |
| |
|
|
| align:start position:0% |
| in 1976 and so on now you know these are |
| pretty flat then these profiles start to |
|
|
| align:start position:0% |
| pretty flat then these profiles start to |
| |
|
|
| align:start position:0% |
| pretty flat then these profiles start to |
| pick up you kind of in your |
|
|
| align:start position:0% |
| pick up you kind of in your |
| |
|
|
| align:start position:0% |
| pick up you kind of in your |
| mind sort of can imagine and I'll show |
|
|
| align:start position:0% |
| mind sort of can imagine and I'll show |
| |
|
|
| align:start position:0% |
| mind sort of can imagine and I'll show |
| you what happens when we splice all all |
|
|
| align:start position:0% |
| you what happens when we splice all all |
| |
|
|
| align:start position:0% |
| you what happens when we splice all all |
| this |
|
|
| align:start position:0% |
| this |
| |
|
|
| align:start position:0% |
| this |
| together |
|
|
| align:start position:0% |
| together |
| |
|
|
| align:start position:0% |
| together |
| um um so it seems like a lot of the |
|
|
| align:start position:0% |
| um um so it seems like a lot of the |
| |
|
|
| align:start position:0% |
| um um so it seems like a lot of the |
| action is is brought about by the boards |
|
|
| align:start position:0% |
| action is is brought about by the boards |
| |
|
|
| align:start position:0% |
| action is is brought about by the boards |
| like the middleaged |
|
|
| align:start position:0% |
| like the middleaged |
| |
|
|
| align:start position:0% |
| like the middleaged |
| Cs Those Who start middleaged in 7 |
|
|
| align:start position:0% |
| Cs Those Who start middleaged in 7 |
| |
|
|
| align:start position:0% |
| Cs Those Who start middleaged in 7 |
| like from 40 to |
|
|
| align:start position:0% |
| like from 40 to |
| |
|
|
| align:start position:0% |
| like from 40 to |
| 55 well let me just the rest is kind of |
|
|
| align:start position:0% |
| 55 well let me just the rest is kind of |
| |
|
|
| align:start position:0% |
| 55 well let me just the rest is kind of |
| flat well let me just jump okay cuz I |
|
|
| align:start position:0% |
| flat well let me just jump okay cuz I |
| |
|
|
| align:start position:0% |
| flat well let me just jump okay cuz I |
| those are the three countries here's |
|
|
| align:start position:0% |
| those are the three countries here's |
| |
|
|
| align:start position:0% |
| those are the three countries here's |
| what's going to when you use all the |
|
|
| align:start position:0% |
| what's going to when you use all the |
| |
|
|
| align:start position:0% |
| what's going to when you use all the |
| surveys over all the years and just |
|
|
| align:start position:0% |
| surveys over all the years and just |
| |
|
|
| align:start position:0% |
| surveys over all the years and just |
| focus on the age yeah so this you see |
|
|
| align:start position:0% |
| focus on the age yeah so this you see |
| |
|
|
| align:start position:0% |
| focus on the age yeah so this you see |
| this you're right you see this is pretty |
|
|
| align:start position:0% |
| this you're right you see this is pretty |
| |
|
|
| align:start position:0% |
| this you're right you see this is pretty |
| flat and then it picks up around age |
|
|
| align:start position:0% |
| flat and then it picks up around age |
| |
|
|
| align:start position:0% |
| flat and then it picks up around age |
| whatever 45 or 50 or something |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| now and these are the results from the |
|
|
| align:start position:0% |
| now and these are the results from the |
| |
|
|
| align:start position:0% |
| now and these are the results from the |
| other |
|
|
| align:start position:0% |
| other |
| |
|
|
| align:start position:0% |
| other |
| countries so is there |
|
|
| align:start position:0% |
| countries so is there |
| |
|
|
| align:start position:0% |
| countries so is there |
| any explanation for why that's the case |
|
|
| align:start position:0% |
| any explanation for why that's the case |
| |
|
|
| align:start position:0% |
| any explanation for why that's the case |
| yeah we're going to get into that you'll |
|
|
| align:start position:0% |
| yeah we're going to get into that you'll |
| |
|
|
| align:start position:0% |
| yeah we're going to get into that you'll |
| be sorry you |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| asked uh and only Tai huh and only taian |
|
|
| align:start position:0% |
| asked uh and only Tai huh and only taian |
| |
|
|
| align:start position:0% |
| asked uh and only Tai huh and only taian |
| the other well okay |
|
|
| align:start position:0% |
| the other well okay |
| |
|
|
| align:start position:0% |
| the other well okay |
| so this is kind of flat and then it kind |
|
|
| align:start position:0% |
| so this is kind of flat and then it kind |
| |
|
|
| align:start position:0% |
| so this is kind of flat and then it kind |
| of comes up and then it you know it |
|
|
| align:start position:0% |
| of comes up and then it you know it |
| |
|
|
| align:start position:0% |
| of comes up and then it you know it |
| flattens out again so Taiwan is |
|
|
| align:start position:0% |
| flattens out again so Taiwan is |
| |
|
|
| align:start position:0% |
| flattens out again so Taiwan is |
| flattening out |
|
|
| align:start position:0% |
| flattening out |
| |
|
|
| align:start position:0% |
| flattening out |
| although unfortunately you know the |
|
|
| align:start position:0% |
| although unfortunately you know the |
| |
|
|
| align:start position:0% |
| although unfortunately you know the |
| cohorts are getting thin the older they |
|
|
| align:start position:0% |
| cohorts are getting thin the older they |
| |
|
|
| align:start position:0% |
| cohorts are getting thin the older they |
| are so you get some sort of shaky data |
|
|
| align:start position:0% |
| are so you get some sort of shaky data |
| |
|
|
| align:start position:0% |
| are so you get some sort of shaky data |
| because you can't average quite so well |
|
|
| align:start position:0% |
| because you can't average quite so well |
| |
|
|
| align:start position:0% |
| because you can't average quite so well |
| this one flattens out Great Britain kind |
|
|
| align:start position:0% |
| this one flattens out Great Britain kind |
| |
|
|
| align:start position:0% |
| this one flattens out Great Britain kind |
| of flattens out the US I don't know |
|
|
| align:start position:0% |
| of flattens out the US I don't know |
| |
|
|
| align:start position:0% |
| of flattens out the US I don't know |
| wasn't very steeply climbing to begin |
|
|
| align:start position:0% |
| wasn't very steeply climbing to begin |
| |
|
|
| align:start position:0% |
| wasn't very steeply climbing to begin |
| with it's not so |
|
|
| align:start position:0% |
| with it's not so |
| |
|
|
| align:start position:0% |
| with it's not so |
| obvious this kind of looks |
|
|
| align:start position:0% |
| obvious this kind of looks |
| |
|
|
| align:start position:0% |
| obvious this kind of looks |
| concave this looks concave but almost |
|
|
| align:start position:0% |
| concave this looks concave but almost |
| |
|
|
| align:start position:0% |
| concave this looks concave but almost |
| linear this actually has almost an |
|
|
| align:start position:0% |
| linear this actually has almost an |
| |
|
|
| align:start position:0% |
| linear this actually has almost an |
| inflection point and then comes in so |
|
|
| align:start position:0% |
| inflection point and then comes in so |
| |
|
|
| align:start position:0% |
| inflection point and then comes in so |
| the question is concave |
|
|
| align:start position:0% |
| the question is concave |
| |
|
|
| align:start position:0% |
| the question is concave |
| convex Etc and |
|
|
| align:start position:0% |
| convex Etc and |
| |
|
|
| align:start position:0% |
| convex Etc and |
| that's where you know we'll do a little |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| modeling by the way you've saw a little |
|
|
| align:start position:0% |
| modeling by the way you've saw a little |
| |
|
|
| align:start position:0% |
| modeling by the way you've saw a little |
| bit about |
|
|
| align:start position:0% |
| bit about |
| |
|
|
| align:start position:0% |
| bit about |
| demographics when we did China one of |
|
|
| align:start position:0% |
| demographics when we did China one of |
| |
|
|
| align:start position:0% |
| demographics when we did China one of |
| those explanations of the savings rates |
|
|
| align:start position:0% |
| those explanations of the savings rates |
| |
|
|
| align:start position:0% |
| those explanations of the savings rates |
| Etc wasn't so much about state-owned |
|
|
| align:start position:0% |
| Etc wasn't so much about state-owned |
| |
|
|
| align:start position:0% |
| Etc wasn't so much about state-owned |
| Enterprise as it was the different |
|
|
| align:start position:0% |
| Enterprise as it was the different |
| |
|
|
| align:start position:0% |
| Enterprise as it was the different |
| demographics and you know young Savers |
|
|
| align:start position:0% |
| demographics and you know young Savers |
| |
|
|
| align:start position:0% |
| demographics and you know young Savers |
| in China and you know sort |
|
|
| align:start position:0% |
| in China and you know sort |
| |
|
|
| align:start position:0% |
| in China and you know sort |
| of debt loaded or less saving inclined |
|
|
| align:start position:0% |
| of debt loaded or less saving inclined |
| |
|
|
| align:start position:0% |
| of debt loaded or less saving inclined |
| households in the US and so different |
|
|
| align:start position:0% |
| households in the US and so different |
| |
|
|
| align:start position:0% |
| households in the US and so different |
| demographics just to remind you it's not |
|
|
| align:start position:0% |
| demographics just to remind you it's not |
| |
|
|
| align:start position:0% |
| demographics just to remind you it's not |
| the first time we've |
|
|
| align:start position:0% |
| the first time we've |
| |
|
|
| align:start position:0% |
| the first time we've |
| uh that we've thought about demographics |
|
|
| align:start position:0% |
| uh that we've thought about demographics |
| |
|
|
| align:start position:0% |
| uh that we've thought about demographics |
| so |
|
|
| align:start position:0% |
| so |
| |
|
|
| align:start position:0% |
| so |
| it's possible to put that there's a |
|
|
| align:start position:0% |
| it's possible to put that there's a |
| |
|
|
| align:start position:0% |
| it's possible to put that there's a |
| there's trivial demographics and some of |
|
|
| align:start position:0% |
| there's trivial demographics and some of |
| |
|
|
| align:start position:0% |
| there's trivial demographics and some of |
| the macro models in the sense that they |
|
|
| align:start position:0% |
| the macro models in the sense that they |
| |
|
|
| align:start position:0% |
| the macro models in the sense that they |
| start with a life cycle model or two |
|
|
| align:start position:0% |
| start with a life cycle model or two |
| |
|
|
| align:start position:0% |
| start with a life cycle model or two |
| period overlapping Generations model but |
|
|
| align:start position:0% |
| period overlapping Generations model but |
| |
|
|
| align:start position:0% |
| period overlapping Generations model but |
| we haven't actually focused |
|
|
| align:start position:0% |
| we haven't actually focused |
| |
|
|
| align:start position:0% |
| we haven't actually focused |
| on in much of this in the uh sort of |
|
|
| align:start position:0% |
| on in much of this in the uh sort of |
| |
|
|
| align:start position:0% |
| on in much of this in the uh sort of |
| micro part of the |
|
|
| align:start position:0% |
| micro part of the |
| |
|
|
| align:start position:0% |
| micro part of the |
| class |
|
|
| align:start position:0% |
| class |
| |
|
|
| align:start position:0% |
| class |
| okay so this is what I said in words |
|
|
| align:start position:0% |
| okay so this is what I said in words |
| |
|
|
| align:start position:0% |
| okay so this is what I said in words |
| they claim Britain is slightly convex I |
|
|
| align:start position:0% |
| they claim Britain is slightly convex I |
| |
|
|
| align:start position:0% |
| they claim Britain is slightly convex I |
| didn't see that just now |
|
|
| align:start position:0% |
| didn't see that just now |
| |
|
|
| align:start position:0% |
| didn't see that just now |
| but |
|
|
| align:start position:0% |
| but |
| |
|
|
| align:start position:0% |
| but |
| um |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| and again you know don't misread those |
|
|
| align:start position:0% |
| and again you know don't misread those |
| |
|
|
| align:start position:0% |
| and again you know don't misread those |
| things to be measures of the total |
|
|
| align:start position:0% |
| things to be measures of the total |
| |
|
|
| align:start position:0% |
| things to be measures of the total |
| increases or decreases in inequality |
|
|
| align:start position:0% |
| increases or decreases in inequality |
| |
|
|
| align:start position:0% |
| increases or decreases in inequality |
| because the demographic structure you |
|
|
| align:start position:0% |
| because the demographic structure you |
| |
|
|
| align:start position:0% |
| because the demographic structure you |
| know is moving is moving around by age |
|
|
| align:start position:0% |
| know is moving is moving around by age |
| |
|
|
| align:start position:0% |
| know is moving is moving around by age |
| over those 20 or so |
|
|
| align:start position:0% |
| over those 20 or so |
| |
|
|
| align:start position:0% |
| over those 20 or so |
| years |
|
|
| align:start position:0% |
| years |
| |
|
|
| align:start position:0% |
| years |
| um all right let's start with the basics |
|
|
| align:start position:0% |
| um all right let's start with the basics |
| |
|
|
| align:start position:0% |
| um all right let's start with the basics |
| here's basically Hall's permanent |
|
|
| align:start position:0% |
| here's basically Hall's permanent |
| |
|
|
| align:start position:0% |
| here's basically Hall's permanent |
| income uh |
|
|
| align:start position:0% |
| income uh |
| |
|
|
| align:start position:0% |
| income uh |
| implication for consumption consumption |
|
|
| align:start position:0% |
| implication for consumption consumption |
| |
|
|
| align:start position:0% |
| implication for consumption consumption |
| should essentially be a random |
|
|
| align:start position:0% |
| should essentially be a random |
| |
|
|
| align:start position:0% |
| should essentially be a random |
| walk uh and it's only moving around |
|
|
| align:start position:0% |
| walk uh and it's only moving around |
| |
|
|
| align:start position:0% |
| walk uh and it's only moving around |
| because of the Innovations or the shock |
|
|
| align:start position:0% |
| because of the Innovations or the shock |
| |
|
|
| align:start position:0% |
| because of the Innovations or the shock |
| to permanent |
|
|
| align:start position:0% |
| to permanent |
| |
|
|
| align:start position:0% |
| to permanent |
| income uh I think that was JP |
|
|
| align:start position:0% |
| income uh I think that was JP |
| |
|
|
| align:start position:0% |
| income uh I think that was JP |
| 1970 the dates here I think it was in |
|
|
| align:start position:0% |
| 1970 the dates here I think it was in |
| |
|
|
| align:start position:0% |
| 1970 the dates here I think it was in |
| the |
|
|
| align:start position:0% |
| the |
| |
|
|
| align:start position:0% |
| the |
| jpe uh there are assumptions this isn't |
|
|
| align:start position:0% |
| jpe uh there are assumptions this isn't |
| |
|
|
| align:start position:0% |
| jpe uh there are assumptions this isn't |
| always true you know he assumed |
|
|
| align:start position:0% |
| always true you know he assumed |
| |
|
|
| align:start position:0% |
| always true you know he assumed |
| quadratic utility you know additive |
|
|
| align:start position:0% |
| quadratic utility you know additive |
| |
|
|
| align:start position:0% |
| quadratic utility you know additive |
| preferences discount rates equal to |
|
|
| align:start position:0% |
| preferences discount rates equal to |
| |
|
|
| align:start position:0% |
| preferences discount rates equal to |
| interest |
|
|
| align:start position:0% |
| interest |
| |
|
|
| align:start position:0% |
| interest |
| rates |
|
|
| align:start position:0% |
| rates |
| |
|
|
| align:start position:0% |
| rates |
| um and I think you know no life |
|
|
| align:start position:0% |
| um and I think you know no life |
| |
|
|
| align:start position:0% |
| um and I think you know no life |
| cycle uh this is supposed to be an |
|
|
| align:start position:0% |
| cycle uh this is supposed to be an |
| |
|
|
| align:start position:0% |
| cycle uh this is supposed to be an |
| innovation so for every person at least |
|
|
| align:start position:0% |
| innovation so for every person at least |
| |
|
|
| align:start position:0% |
| innovation so for every person at least |
| you |
|
|
| align:start position:0% |
| you |
| |
|
|
| align:start position:0% |
| you |
| know there's no co uh covariance between |
|
|
| align:start position:0% |
| know there's no co uh covariance between |
| |
|
|
| align:start position:0% |
| know there's no co uh covariance between |
| lagged consumption and this Innovation |
|
|
| align:start position:0% |
| lagged consumption and this Innovation |
| |
|
|
| align:start position:0% |
| lagged consumption and this Innovation |
| because it wasn't supposed to be |
|
|
| align:start position:0% |
| because it wasn't supposed to be |
| |
|
|
| align:start position:0% |
| because it wasn't supposed to be |
| predictable that's the same conversation |
|
|
| align:start position:0% |
| predictable that's the same conversation |
| |
|
|
| align:start position:0% |
| predictable that's the same conversation |
| is how much if anything you see about |
|
|
| align:start position:0% |
| is how much if anything you see about |
| |
|
|
| align:start position:0% |
| is how much if anything you see about |
| the future here zero is seen okay so I |
|
|
| align:start position:0% |
| the future here zero is seen okay so I |
| |
|
|
| align:start position:0% |
| the future here zero is seen okay so I |
| described this in words that |
|
|
| align:start position:0% |
| described this in words that |
| |
|
|
| align:start position:0% |
| described this in words that |
| basically you know if it were stable |
|
|
| align:start position:0% |
| basically you know if it were stable |
| |
|
|
| align:start position:0% |
| basically you know if it were stable |
| like this on average then |
|
|
| align:start position:0% |
| like this on average then |
| |
|
|
| align:start position:0% |
| like this on average then |
| consumption dispersion shouldn't be |
|
|
| align:start position:0% |
| consumption dispersion shouldn't be |
| |
|
|
| align:start position:0% |
| consumption dispersion shouldn't be |
| changing but you're just layering on |
|
|
| align:start position:0% |
| changing but you're just layering on |
| |
|
|
| align:start position:0% |
| changing but you're just layering on |
| repeatedly shock After Shock After Shock |
|
|
| align:start position:0% |
| repeatedly shock After Shock After Shock |
| |
|
|
| align:start position:0% |
| repeatedly shock After Shock After Shock |
| so with that zero covariance assumption |
|
|
| align:start position:0% |
| so with that zero covariance assumption |
| |
|
|
| align:start position:0% |
| so with that zero covariance assumption |
| the variances are increasing by the |
|
|
| align:start position:0% |
| the variances are increasing by the |
| |
|
|
| align:start position:0% |
| the variances are increasing by the |
| variance of that UT |
|
|
| align:start position:0% |
| variance of that UT |
| |
|
|
| align:start position:0% |
| variance of that UT |
| shock |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um and basically if you started plotting |
|
|
| align:start position:0% |
| um and basically if you started plotting |
| |
|
|
| align:start position:0% |
| um and basically if you started plotting |
| these distributions you |
|
|
| align:start position:0% |
| these distributions you |
| |
|
|
| align:start position:0% |
| these distributions you |
| know the one at T is going to have |
|
|
| align:start position:0% |
| know the one at T is going to have |
| |
|
|
| align:start position:0% |
| know the one at T is going to have |
| fatter Tails than the one at T minus one |
|
|
| align:start position:0% |
| fatter Tails than the one at T minus one |
| |
|
|
| align:start position:0% |
| fatter Tails than the one at T minus one |
| so T minus one quote first order |
|
|
| align:start position:0% |
| so T minus one quote first order |
| |
|
|
| align:start position:0% |
| so T minus one quote first order |
| stochastically |
|
|
| align:start position:0% |
| stochastically |
| |
|
|
| align:start position:0% |
| stochastically |
| dominates |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| you have to be a little bit careful |
|
|
| align:start position:0% |
| you have to be a little bit careful |
| |
|
|
| align:start position:0% |
| you have to be a little bit careful |
| throughout all of this |
|
|
| align:start position:0% |
| throughout all of this |
| |
|
|
| align:start position:0% |
| throughout all of this |
| stuff you think about things from the |
|
|
| align:start position:0% |
| stuff you think about things from the |
| |
|
|
| align:start position:0% |
| stuff you think about things from the |
| point of view of a person tracking a |
|
|
| align:start position:0% |
| point of view of a person tracking a |
| |
|
|
| align:start position:0% |
| point of view of a person tracking a |
| person over time but that statement |
|
|
| align:start position:0% |
| person over time but that statement |
| |
|
|
| align:start position:0% |
| person over time but that statement |
| about CT and UT is actually a statement |
|
|
| align:start position:0% |
| about CT and UT is actually a statement |
| |
|
|
| align:start position:0% |
| about CT and UT is actually a statement |
| about the cross-section as well as the |
|
|
| align:start position:0% |
| about the cross-section as well as the |
| |
|
|
| align:start position:0% |
| about the cross-section as well as the |
| intertemporal |
|
|
| align:start position:0% |
| intertemporal |
| |
|
|
| align:start position:0% |
| intertemporal |
| dimension |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um okay |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| this doesn't this model typically didn't |
|
|
| align:start position:0% |
| this doesn't this model typically didn't |
| |
|
|
| align:start position:0% |
| this doesn't this model typically didn't |
| have taste sh shifters or heterogeneous |
|
|
| align:start position:0% |
| have taste sh shifters or heterogeneous |
| |
|
|
| align:start position:0% |
| have taste sh shifters or heterogeneous |
| preferences uh you can put those things |
|
|
| align:start position:0% |
| preferences uh you can put those things |
| |
|
|
| align:start position:0% |
| preferences uh you can put those things |
| in depending on how you put them in it |
|
|
| align:start position:0% |
| in depending on how you put them in it |
| |
|
|
| align:start position:0% |
| in depending on how you put them in it |
| does make a |
|
|
| align:start position:0% |
| does make a |
| |
|
|
| align:start position:0% |
| does make a |
| difference arguably if we hadn't done |
|
|
| align:start position:0% |
| difference arguably if we hadn't done |
| |
|
|
| align:start position:0% |
| difference arguably if we hadn't done |
| the demographics right with a claim Deon |
|
|
| align:start position:0% |
| the demographics right with a claim Deon |
| |
|
|
| align:start position:0% |
| the demographics right with a claim Deon |
| in Paxon claim for Taiwan you know then |
|
|
| align:start position:0% |
| in Paxon claim for Taiwan you know then |
| |
|
|
| align:start position:0% |
| in Paxon claim for Taiwan you know then |
| you kind of need preference shocks to uh |
|
|
| align:start position:0% |
| you kind of need preference shocks to uh |
| |
|
|
| align:start position:0% |
| you kind of need preference shocks to uh |
| to help with the observed dispersion |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| now here's the basic sort of budget |
|
|
| align:start position:0% |
| now here's the basic sort of budget |
| |
|
|
| align:start position:0% |
| now here's the basic sort of budget |
| equation |
|
|
| align:start position:0% |
| equation |
| |
|
|
| align:start position:0% |
| equation |
| again |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um and I'm afraid each one of these |
|
|
| align:start position:0% |
| um and I'm afraid each one of these |
| |
|
|
| align:start position:0% |
| um and I'm afraid each one of these |
| papers kind of has different convention |
|
|
| align:start position:0% |
| papers kind of has different convention |
| |
|
|
| align:start position:0% |
| papers kind of has different convention |
| about the timing so it's really kind of |
|
|
| align:start position:0% |
| about the timing so it's really kind of |
| |
|
|
| align:start position:0% |
| about the timing so it's really kind of |
| hard to keep tracking it track it but |
|
|
| align:start position:0% |
| hard to keep tracking it track it but |
| |
|
|
| align:start position:0% |
| hard to keep tracking it track it but |
| but basically you know you have |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um sources and uses of money the sources |
|
|
| align:start position:0% |
| um sources and uses of money the sources |
| |
|
|
| align:start position:0% |
| um sources and uses of money the sources |
| of previous assets plus interest uh the |
|
|
| align:start position:0% |
| of previous assets plus interest uh the |
| |
|
|
| align:start position:0% |
| of previous assets plus interest uh the |
| uses are a source also is income and the |
|
|
| align:start position:0% |
| uses are a source also is income and the |
| |
|
|
| align:start position:0% |
| uses are a source also is income and the |
| use is consumption and then what you |
|
|
| align:start position:0% |
| use is consumption and then what you |
| |
|
|
| align:start position:0% |
| use is consumption and then what you |
| don't spend accumulates on to the uh to |
|
|
| align:start position:0% |
| don't spend accumulates on to the uh to |
| |
|
|
| align:start position:0% |
| don't spend accumulates on to the uh to |
| the next period if you do do the life |
|
|
| align:start position:0% |
| the next period if you do do the life |
| |
|
|
| align:start position:0% |
| the next period if you do do the life |
| cycle uh with a terminal |
|
|
| align:start position:0% |
| cycle uh with a terminal |
| |
|
|
| align:start position:0% |
| cycle uh with a terminal |
| date for sure say age 99 or whatever you |
|
|
| align:start position:0% |
| date for sure say age 99 or whatever you |
| |
|
|
| align:start position:0% |
| date for sure say age 99 or whatever you |
| want |
|
|
| align:start position:0% |
| want |
| |
|
|
| align:start position:0% |
| want |
| um then you can actually get a formula |
|
|
| align:start position:0% |
| um then you can actually get a formula |
| |
|
|
| align:start position:0% |
| um then you can actually get a formula |
| closed form for consumption under these |
|
|
| align:start position:0% |
| closed form for consumption under these |
| |
|
|
| align:start position:0% |
| closed form for consumption under these |
| other maintained |
|
|
| align:start position:0% |
| other maintained |
| |
|
|
| align:start position:0% |
| other maintained |
| assumptions and uh you know |
|
|
| align:start position:0% |
| assumptions and uh you know |
| |
|
|
| align:start position:0% |
| assumptions and uh you know |
| basically it's kind of saying |
|
|
| align:start position:0% |
| basically it's kind of saying |
| |
|
|
| align:start position:0% |
| basically it's kind of saying |
| consumption ought to equal something |
|
|
| align:start position:0% |
| consumption ought to equal something |
| |
|
|
| align:start position:0% |
| consumption ought to equal something |
| about the return stream through the |
|
|
| align:start position:0% |
| about the return stream through the |
| |
|
|
| align:start position:0% |
| about the return stream through the |
| interest rate on assets and something |
|
|
| align:start position:0% |
| interest rate on assets and something |
| |
|
|
| align:start position:0% |
| interest rate on assets and something |
| about the forward-looking part which is |
|
|
| align:start position:0% |
| about the forward-looking part which is |
| |
|
|
| align:start position:0% |
| about the forward-looking part which is |
| you know expected future income shocks |
|
|
| align:start position:0% |
| you know expected future income shocks |
| |
|
|
| align:start position:0% |
| you know expected future income shocks |
| so so this kind of helps |
|
|
| align:start position:0% |
| so so this kind of helps |
| |
|
|
| align:start position:0% |
| so so this kind of helps |
| you see you know how future things are |
|
|
| align:start position:0% |
| you see you know how future things are |
| |
|
|
| align:start position:0% |
| you see you know how future things are |
| already if this is going to be very high |
|
|
| align:start position:0% |
| already if this is going to be very high |
| |
|
|
| align:start position:0% |
| already if this is going to be very high |
| for example then this is already going |
|
|
| align:start position:0% |
| for example then this is already going |
| |
|
|
| align:start position:0% |
| for example then this is already going |
| up uh so it's kind of smooth against or |
|
|
| align:start position:0% |
| up uh so it's kind of smooth against or |
| |
|
|
| align:start position:0% |
| up uh so it's kind of smooth against or |
| low vice versa now It's Tricky with a |
|
|
| align:start position:0% |
| low vice versa now It's Tricky with a |
| |
|
|
| align:start position:0% |
| low vice versa now It's Tricky with a |
| finite Horizon and a cap T because |
|
|
| align:start position:0% |
| finite Horizon and a cap T because |
| |
|
|
| align:start position:0% |
| finite Horizon and a cap T because |
| there's a coefficient premultiplying |
|
|
| align:start position:0% |
| there's a coefficient premultiplying |
| |
|
|
| align:start position:0% |
| there's a coefficient premultiplying |
| this but but it's for that reason |
|
|
| align:start position:0% |
| this but but it's for that reason |
| |
|
|
| align:start position:0% |
| this but but it's for that reason |
| basically obviously the the close closer |
|
|
| align:start position:0% |
| basically obviously the the close closer |
| |
|
|
| align:start position:0% |
| basically obviously the the close closer |
| you are to to the end to cap T the less |
|
|
| align:start position:0% |
| you are to to the end to cap T the less |
| |
|
|
| align:start position:0% |
| you are to to the end to cap T the less |
| smoothing you can accomplish and that's |
|
|
| align:start position:0% |
| smoothing you can accomplish and that's |
| |
|
|
| align:start position:0% |
| smoothing you can accomplish and that's |
| inherited into this |
|
|
| align:start position:0% |
| inherited into this |
| |
|
|
| align:start position:0% |
| inherited into this |
| formula so yep the shocks here are ID |
|
|
| align:start position:0% |
| formula so yep the shocks here are ID |
| |
|
|
| align:start position:0% |
| formula so yep the shocks here are ID |
| over time |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| yes oh |
|
|
| align:start position:0% |
| yes oh |
| |
|
|
| align:start position:0% |
| yes oh |
| well the the shock to permanent income |
|
|
| align:start position:0% |
| well the the shock to permanent income |
| |
|
|
| align:start position:0% |
| well the the shock to permanent income |
| is |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| IID but permanent income has is an auto |
|
|
| align:start position:0% |
| IID but permanent income has is an auto |
| |
|
|
| align:start position:0% |
| IID but permanent income has is an auto |
| regressive process so |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um the standard incomplete markets model |
|
|
| align:start position:0% |
| um the standard incomplete markets model |
| |
|
|
| align:start position:0% |
| um the standard incomplete markets model |
| had an infinite Horizon and had a |
|
|
| align:start position:0% |
| had an infinite Horizon and had a |
| |
|
|
| align:start position:0% |
| had an infinite Horizon and had a |
| discount rate equal to one or basically |
|
|
| align:start position:0% |
| discount rate equal to one or basically |
| |
|
|
| align:start position:0% |
| discount rate equal to one or basically |
| you know beta * 1 + r equal 1 |
|
|
| align:start position:0% |
| you know beta * 1 + r equal 1 |
| |
|
|
| align:start position:0% |
| you know beta * 1 + r equal 1 |
| uh in the finite Horizon case beta that |
|
|
| align:start position:0% |
| uh in the finite Horizon case beta that |
| |
|
|
| align:start position:0% |
| uh in the finite Horizon case beta that |
| thing premultiplying consumption turns |
|
|
| align:start position:0% |
| thing premultiplying consumption turns |
| |
|
|
| align:start position:0% |
| thing premultiplying consumption turns |
| out if you stare at it is concave we're |
|
|
| align:start position:0% |
| out if you stare at it is concave we're |
| |
|
|
| align:start position:0% |
| out if you stare at it is concave we're |
| already beginning to anticipate these |
|
|
| align:start position:0% |
| already beginning to anticipate these |
| |
|
|
| align:start position:0% |
| already beginning to anticipate these |
| formulas uh and decreasing in T and if |
|
|
| align:start position:0% |
| formulas uh and decreasing in T and if |
| |
|
|
| align:start position:0% |
| formulas uh and decreasing in T and if |
| you go back to those two equations |
|
|
| align:start position:0% |
| you go back to those two equations |
| |
|
|
| align:start position:0% |
| you go back to those two equations |
| you'll get kind of a simplified version |
|
|
| align:start position:0% |
| you'll get kind of a simplified version |
| |
|
|
| align:start position:0% |
| you'll get kind of a simplified version |
| that beta T times the change in |
|
|
| align:start position:0% |
| that beta T times the change in |
| |
|
|
| align:start position:0% |
| that beta T times the change in |
| consumption is equal to this quote |
|
|
| align:start position:0% |
| consumption is equal to this quote |
| |
|
|
| align:start position:0% |
| consumption is equal to this quote |
| consumption |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| Innovation and here's a formula for the |
|
|
| align:start position:0% |
| Innovation and here's a formula for the |
| |
|
|
| align:start position:0% |
| Innovation and here's a formula for the |
| consumption Innovation which is |
|
|
| align:start position:0% |
| consumption Innovation which is |
| |
|
|
| align:start position:0% |
| consumption Innovation which is |
| again |
|
|
| align:start position:0% |
| again |
| |
|
|
| align:start position:0% |
| again |
| uh you know the difference in |
|
|
| align:start position:0% |
| uh you know the difference in |
| |
|
|
| align:start position:0% |
| uh you know the difference in |
| expectations so you're forecasting the |
|
|
| align:start position:0% |
| expectations so you're forecasting the |
| |
|
|
| align:start position:0% |
| expectations so you're forecasting the |
| future all the time but you're also |
|
|
| align:start position:0% |
| future all the time but you're also |
| |
|
|
| align:start position:0% |
| future all the time but you're also |
| getting these |
|
|
| align:start position:0% |
| getting these |
| |
|
|
| align:start position:0% |
| getting these |
| shocks |
|
|
| align:start position:0% |
| shocks |
| |
|
|
| align:start position:0% |
| shocks |
| so as of T and T minus one you were |
|
|
| align:start position:0% |
| so as of T and T minus one you were |
| |
|
|
| align:start position:0% |
| so as of T and T minus one you were |
| forecasting YT at at t plus k Sorry y of |
|
|
| align:start position:0% |
| forecasting YT at at t plus k Sorry y of |
| |
|
|
| align:start position:0% |
| forecasting YT at at t plus k Sorry y of |
| t+ K not either to either to T or T |
|
|
| align:start position:0% |
| t+ K not either to either to T or T |
| |
|
|
| align:start position:0% |
| t+ K not either to either to T or T |
| minus one it could be 10 years out and |
|
|
| align:start position:0% |
| minus one it could be 10 years out and |
| |
|
|
| align:start position:0% |
| minus one it could be 10 years out and |
| you're constantly adjusting your |
|
|
| align:start position:0% |
| you're constantly adjusting your |
| |
|
|
| align:start position:0% |
| you're constantly adjusting your |
| expectations based on the current |
|
|
| align:start position:0% |
| expectations based on the current |
| |
|
|
| align:start position:0% |
| expectations based on the current |
| information you have from the income |
|
|
| align:start position:0% |
| information you have from the income |
| |
|
|
| align:start position:0% |
| information you have from the income |
| process and you're summing up over all |
|
|
| align:start position:0% |
| process and you're summing up over all |
| |
|
|
| align:start position:0% |
| process and you're summing up over all |
| those future income shocks and |
|
|
| align:start position:0% |
| those future income shocks and |
| |
|
|
| align:start position:0% |
| those future income shocks and |
| discounting backwards |
|
|
| align:start position:0% |
| discounting backwards |
| |
|
|
| align:start position:0% |
| discounting backwards |
| uh to get these quote |
|
|
| align:start position:0% |
| uh to get these quote |
| |
|
|
| align:start position:0% |
| uh to get these quote |
| Innovations so well so you know then |
|
|
| align:start position:0% |
| Innovations so well so you know then |
| |
|
|
| align:start position:0% |
| Innovations so well so you know then |
| imagine starting this out at some date T |
|
|
| align:start position:0% |
| imagine starting this out at some date T |
| |
|
|
| align:start position:0% |
| imagine starting this out at some date T |
| equals |
|
|
| align:start position:0% |
| equals |
| |
|
|
| align:start position:0% |
| equals |
| zero uh and then t equal 1 and t equal 2 |
|
|
| align:start position:0% |
| zero uh and then t equal 1 and t equal 2 |
| |
|
|
| align:start position:0% |
| zero uh and then t equal 1 and t equal 2 |
| and so on and you could just write out |
|
|
| align:start position:0% |
| and so on and you could just write out |
| |
|
|
| align:start position:0% |
| and so on and you could just write out |
| literally consumption in each one of |
|
|
| align:start position:0% |
| literally consumption in each one of |
| |
|
|
| align:start position:0% |
| literally consumption in each one of |
| those |
|
|
| align:start position:0% |
| those |
| |
|
|
| align:start position:0% |
| those |
| dates |
|
|
| align:start position:0% |
| dates |
| |
|
|
| align:start position:0% |
| dates |
| um of course when you go from one date |
|
|
| align:start position:0% |
| um of course when you go from one date |
| |
|
|
| align:start position:0% |
| um of course when you go from one date |
| to another you can hit with this shock |
|
|
| align:start position:0% |
| to another you can hit with this shock |
| |
|
|
| align:start position:0% |
| to another you can hit with this shock |
| and you're pre-multiplying by the beta |
|
|
| align:start position:0% |
| and you're pre-multiplying by the beta |
| |
|
|
| align:start position:0% |
| and you're pre-multiplying by the beta |
| so you end up with this you know an |
|
|
| align:start position:0% |
| so you end up with this you know an |
| |
|
|
| align:start position:0% |
| so you end up with this you know an |
| explicit formula |
|
|
| align:start position:0% |
| explicit formula |
| |
|
|
| align:start position:0% |
| explicit formula |
| for consumption equal to its initial |
|
|
| align:start position:0% |
| for consumption equal to its initial |
| |
|
|
| align:start position:0% |
| for consumption equal to its initial |
| given level plus the beta moves on the |
|
|
| align:start position:0% |
| given level plus the beta moves on the |
| |
|
|
| align:start position:0% |
| given level plus the beta moves on the |
| right hand side this sort of beta |
|
|
| align:start position:0% |
| right hand side this sort of beta |
| |
|
|
| align:start position:0% |
| right hand side this sort of beta |
| discounted but it's not beta in the |
|
|
| align:start position:0% |
| discounted but it's not beta in the |
| |
|
|
| align:start position:0% |
| discounted but it's not beta in the |
| preference function this is that that |
|
|
| align:start position:0% |
| preference function this is that that |
| |
|
|
| align:start position:0% |
| preference function this is that that |
| data thing that had to do with little T |
|
|
| align:start position:0% |
| data thing that had to do with little T |
| |
|
|
| align:start position:0% |
| data thing that had to do with little T |
| Big T and all of that that took care of |
|
|
| align:start position:0% |
| Big T and all of that that took care of |
| |
|
|
| align:start position:0% |
| Big T and all of that that took care of |
| the life cycle |
|
|
| align:start position:0% |
| the life cycle |
| |
|
|
| align:start position:0% |
| the life cycle |
| considerations |
|
|
| align:start position:0% |
| considerations |
| |
|
|
| align:start position:0% |
| considerations |
| um so finally we see again you know the |
|
|
| align:start position:0% |
| um so finally we see again you know the |
| |
|
|
| align:start position:0% |
| um so finally we see again you know the |
| familiar theme that the variance at |
|
|
| align:start position:0% |
| familiar theme that the variance at |
| |
|
|
| align:start position:0% |
| familiar theme that the variance at |
| T is related to the initial |
|
|
| align:start position:0% |
| T is related to the initial |
| |
|
|
| align:start position:0% |
| T is related to the initial |
| cross-sectional variance at zero you |
|
|
| align:start position:0% |
| cross-sectional variance at zero you |
| |
|
|
| align:start position:0% |
| cross-sectional variance at zero you |
| know plus the sum of of variance terms |
|
|
| align:start position:0% |
| know plus the sum of of variance terms |
| |
|
|
| align:start position:0% |
| know plus the sum of of variance terms |
| um you know so the issue well so at |
|
|
| align:start position:0% |
| um you know so the issue well so at |
| |
|
|
| align:start position:0% |
| um you know so the issue well so at |
| roughly speaking it looks like yeah it |
|
|
| align:start position:0% |
| roughly speaking it looks like yeah it |
| |
|
|
| align:start position:0% |
| roughly speaking it looks like yeah it |
| ought to increase unless you know you |
|
|
| align:start position:0% |
| ought to increase unless you know you |
| |
|
|
| align:start position:0% |
| ought to increase unless you know you |
| retire and you have no more things to |
|
|
| align:start position:0% |
| retire and you have no more things to |
| |
|
|
| align:start position:0% |
| retire and you have no more things to |
| forecast and this piece goes |
|
|
| align:start position:0% |
| forecast and this piece goes |
| |
|
|
| align:start position:0% |
| forecast and this piece goes |
| away but before that happens you're |
|
|
| align:start position:0% |
| away but before that happens you're |
| |
|
|
| align:start position:0% |
| away but before that happens you're |
| looking at Future and making |
|
|
| align:start position:0% |
| looking at Future and making |
| |
|
|
| align:start position:0% |
| looking at Future and making |
| expectations of future income so you |
|
|
| align:start position:0% |
| expectations of future income so you |
| |
|
|
| align:start position:0% |
| expectations of future income so you |
| just keep adding on now so that's why |
|
|
| align:start position:0% |
| just keep adding on now so that's why |
| |
|
|
| align:start position:0% |
| just keep adding on now so that's why |
| inequality is increasing in the data |
|
|
| align:start position:0% |
| inequality is increasing in the data |
| |
|
|
| align:start position:0% |
| inequality is increasing in the data |
| through the lens of these models and |
|
|
| align:start position:0% |
| through the lens of these models and |
| |
|
|
| align:start position:0% |
| through the lens of these models and |
| then the issue |
|
|
| align:start position:0% |
| then the issue |
| |
|
|
| align:start position:0% |
| then the issue |
| is you know is it linear or concave or |
|
|
| align:start position:0% |
| is you know is it linear or concave or |
| |
|
|
| align:start position:0% |
| is you know is it linear or concave or |
| convex that has to do with this beta and |
|
|
| align:start position:0% |
| convex that has to do with this beta and |
| |
|
|
| align:start position:0% |
| convex that has to do with this beta and |
| also has to do you know with |
|
|
| align:start position:0% |
| also has to do you know with |
| |
|
|
| align:start position:0% |
| also has to do you know with |
| what we can infer about Sigma about the |
|
|
| align:start position:0% |
| what we can infer about Sigma about the |
| |
|
|
| align:start position:0% |
| what we can infer about Sigma about the |
| consumption |
|
|
| align:start position:0% |
| consumption |
| |
|
|
| align:start position:0% |
| consumption |
| Innovations |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um |
|
|
| align:start position:0% |
| um |
| |
|
|
| align:start position:0% |
| um |
| so so in response to your |
|
|
| align:start position:0% |
| so so in response to your |
| |
|
|
| align:start position:0% |
| so so in response to your |
| question you know if we assume that this |
|
|
| align:start position:0% |
| question you know if we assume that this |
| |
|
|
| align:start position:0% |
| question you know if we assume that this |
| Innovation is entirely White |
|
|
| align:start position:0% |
| Innovation is entirely White |
| |
|
|
| align:start position:0% |
| Innovation is entirely White |
| Noise you know normalized by the |
|
|
| align:start position:0% |
| Noise you know normalized by the |
| |
|
|
| align:start position:0% |
| Noise you know normalized by the |
| interest rate then Sigma Square Ada at T |
|
|
| align:start position:0% |
| interest rate then Sigma Square Ada at T |
| |
|
|
| align:start position:0% |
| interest rate then Sigma Square Ada at T |
| is a constant that doesn't depend on T |
|
|
| align:start position:0% |
| is a constant that doesn't depend on T |
| |
|
|
| align:start position:0% |
| is a constant that doesn't depend on T |
| and this is the resulting |
|
|
| align:start position:0% |
| and this is the resulting |
| |
|
|
| align:start position:0% |
| and this is the resulting |
| expression with the sign Square Ada |
|
|
| align:start position:0% |
| expression with the sign Square Ada |
| |
|
|
| align:start position:0% |
| expression with the sign Square Ada |
| pulled out front and then it's you know |
|
|
| align:start position:0% |
| pulled out front and then it's you know |
| |
|
|
| align:start position:0% |
| pulled out front and then it's you know |
| entirely the |
|
|
| align:start position:0% |
| entirely the |
| |
|
|
| align:start position:0% |
| entirely the |
| convexity is entirely to do due to this |
|
|
| align:start position:0% |
| convexity is entirely to do due to this |
| |
|
|
| align:start position:0% |
| convexity is entirely to do due to this |
| beta thing which if you start taking |
|
|
| align:start position:0% |
| beta thing which if you start taking |
| |
|
|
| align:start position:0% |
| beta thing which if you start taking |
| some derivatives and so on it's a bit |
|
|
| align:start position:0% |
| some derivatives and so on it's a bit |
| |
|
|
| align:start position:0% |
| some derivatives and so on it's a bit |
| messy you can convince yourself that it |
|
|
| align:start position:0% |
| messy you can convince yourself that it |
| |
|
|
| align:start position:0% |
| messy you can convince yourself that it |
| that that thing is |
|
|
| align:start position:0% |
| that that thing is |
| |
|
|
| align:start position:0% |
| that that thing is |
| convex here's an orthogonal |
|
|
| align:start position:0% |
| convex here's an orthogonal |
| |
|
|
| align:start position:0% |
| convex here's an orthogonal |
| example I guess Yan I jumped the gun a |
|
|
| align:start position:0% |
| example I guess Yan I jumped the gun a |
| |
|
|
| align:start position:0% |
| example I guess Yan I jumped the gun a |
| bit because this actually allows |
|
|
| align:start position:0% |
| bit because this actually allows |
| |
|
|
| align:start position:0% |
| bit because this actually allows |
| something a bit different which |
|
|
| align:start position:0% |
| something a bit different which |
| |
|
|
| align:start position:0% |
| something a bit different which |
| is uh this Auto regressive thing well |
|
|
| align:start position:0% |
| is uh this Auto regressive thing well |
| |
|
|
| align:start position:0% |
| is uh this Auto regressive thing well |
| this is IID and then this is auto |
|
|
| align:start position:0% |
| this is IID and then this is auto |
| |
|
|
| align:start position:0% |
| this is IID and then this is auto |
| regressive so this income process |
|
|
| align:start position:0% |
| regressive so this income process |
| |
|
|
| align:start position:0% |
| regressive so this income process |
| is uh |
|
|
| align:start position:0% |
| is uh |
| |
|
|
| align:start position:0% |
| is uh |
| persistent |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um |
|
|
| align:start position:0% |
| um |
| |
|
|
| align:start position:0% |
| um |
| it's a bit odd because you know this was |
|
|
| align:start position:0% |
| it's a bit odd because you know this was |
| |
|
|
| align:start position:0% |
| it's a bit odd because you know this was |
| the Innovation that had to |
|
|
| align:start position:0% |
| the Innovation that had to |
| |
|
|
| align:start position:0% |
| the Innovation that had to |
| do with the Innovation to the right hand |
|
|
| align:start position:0% |
| do with the Innovation to the right hand |
| |
|
|
| align:start position:0% |
| do with the Innovation to the right hand |
| side would had to do with all those |
|
|
| align:start position:0% |
| side would had to do with all those |
| |
|
|
| align:start position:0% |
| side would had to do with all those |
| expectation differences so it's like |
|
|
| align:start position:0% |
| expectation differences so it's like |
| |
|
|
| align:start position:0% |
| expectation differences so it's like |
| let's just assume it looks something |
|
|
| align:start position:0% |
| let's just assume it looks something |
| |
|
|
| align:start position:0% |
| let's just assume it looks something |
| like this this is more explicit about |
|
|
| align:start position:0% |
| like this this is more explicit about |
| |
|
|
| align:start position:0% |
| like this this is more explicit about |
| the income process and you can derive |
|
|
| align:start position:0% |
| the income process and you can derive |
| |
|
|
| align:start position:0% |
| the income process and you can derive |
| the formula for the change in |
|
|
| align:start position:0% |
| the formula for the change in |
| |
|
|
| align:start position:0% |
| the formula for the change in |
| consumption uh where this beta R thing |
|
|
| align:start position:0% |
| consumption uh where this beta R thing |
| |
|
|
| align:start position:0% |
| consumption uh where this beta R thing |
| is now this mess |
|
|
| align:start position:0% |
| is now this mess |
| |
|
|
| align:start position:0% |
| is now this mess |
| um and it turns out this will be |
|
|
| align:start position:0% |
| um and it turns out this will be |
| |
|
|
| align:start position:0% |
| um and it turns out this will be |
| concave |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| uh if you can sign this |
|
|
| align:start position:0% |
| uh if you can sign this |
| |
|
|
| align:start position:0% |
| uh if you can sign this |
| expression and it may also be decreasing |
|
|
| align:start position:0% |
| expression and it may also be decreasing |
| |
|
|
| align:start position:0% |
| expression and it may also be decreasing |
| in |
|
|
| align:start position:0% |
| in |
| |
|
|
| align:start position:0% |
| in |
| age if this is |
|
|
| align:start position:0% |
| age if this is |
| |
|
|
| align:start position:0% |
| age if this is |
| true uh and so actually except for some |
|
|
| align:start position:0% |
| true uh and so actually except for some |
| |
|
|
| align:start position:0% |
| true uh and so actually except for some |
| values of theta both things you know |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so you know so two of those three |
|
|
| align:start position:0% |
| so you know so two of those three |
| |
|
|
| align:start position:0% |
| so you know so two of those three |
| countries the profile |
|
|
| align:start position:0% |
| countries the profile |
| |
|
|
| align:start position:0% |
| countries the profile |
| was say not concave it could have been |
|
|
| align:start position:0% |
| was say not concave it could have been |
| |
|
|
| align:start position:0% |
| was say not concave it could have been |
| linear which is a weak case of concavity |
|
|
| align:start position:0% |
| linear which is a weak case of concavity |
| |
|
|
| align:start position:0% |
| linear which is a weak case of concavity |
| or even convex and so basically then you |
|
|
| align:start position:0% |
| or even convex and so basically then you |
| |
|
|
| align:start position:0% |
| or even convex and so basically then you |
| could rule this out because these are |
|
|
| align:start position:0% |
| could rule this out because these are |
| |
|
|
| align:start position:0% |
| could rule this out because these are |
| you know this kind of persistence would |
|
|
| align:start position:0% |
| you know this kind of persistence would |
| |
|
|
| align:start position:0% |
| you know this kind of persistence would |
| give you concavity but you don't see |
|
|
| align:start position:0% |
| give you concavity but you don't see |
| |
|
|
| align:start position:0% |
| give you concavity but you don't see |
| that |
|
|
| align:start position:0% |
| that |
| |
|
|
| align:start position:0% |
| that |
| um but it but then we have the sort of |
|
|
| align:start position:0% |
| um but it but then we have the sort of |
| |
|
|
| align:start position:0% |
| um but it but then we have the sort of |
| paradox that that something like you |
|
|
| align:start position:0% |
| paradox that that something like you |
| |
|
|
| align:start position:0% |
| paradox that that something like you |
| know these |
|
|
| align:start position:0% |
| know these |
| |
|
|
| align:start position:0% |
| know these |
| uh White Noise product processes must be |
|
|
| align:start position:0% |
| uh White Noise product processes must be |
| |
|
|
| align:start position:0% |
| uh White Noise product processes must be |
| closer to the truth if we're going to |
|
|
| align:start position:0% |
| closer to the truth if we're going to |
| |
|
|
| align:start position:0% |
| closer to the truth if we're going to |
| get convex profiles but that's an |
|
|
| align:start position:0% |
| get convex profiles but that's an |
| |
|
|
| align:start position:0% |
| get convex profiles but that's an |
| assumption |
|
|
| align:start position:0% |
| assumption |
| |
|
|
| align:start position:0% |
| assumption |
| about the income |
|
|
| align:start position:0% |
| about the income |
| |
|
|
| align:start position:0% |
| about the income |
| process and in |
|
|
| align:start position:0% |
| process and in |
| |
|
|
| align:start position:0% |
| process and in |
| particular you know you know one way to |
|
|
| align:start position:0% |
| particular you know you know one way to |
| |
|
|
| align:start position:0% |
| particular you know you know one way to |
| get it is to say that there's a large |
|
|
| align:start position:0% |
| get it is to say that there's a large |
| |
|
|
| align:start position:0% |
| get it is to say that there's a large |
| stationary component to income so you're |
|
|
| align:start position:0% |
| stationary component to income so you're |
| |
|
|
| align:start position:0% |
| stationary component to income so you're |
| not getting those Innovations in your |
|
|
| align:start position:0% |
| not getting those Innovations in your |
| |
|
|
| align:start position:0% |
| not getting those Innovations in your |
| forecast and uh and we don't see that in |
|
|
| align:start position:0% |
| forecast and uh and we don't see that in |
| |
|
|
| align:start position:0% |
| forecast and uh and we don't see that in |
| the |
|
|
| align:start position:0% |
| the |
| |
|
|
| align:start position:0% |
| the |
| data income profiles are not stationary |
|
|
| align:start position:0% |
| data income profiles are not stationary |
| |
|
|
| align:start position:0% |
| data income profiles are not stationary |
| there's heavy life |
|
|
| align:start position:0% |
| there's heavy life |
| |
|
|
| align:start position:0% |
| there's heavy life |
| cycle uh |
|
|
| align:start position:0% |
| cycle uh |
| |
|
|
| align:start position:0% |
| cycle uh |
| components |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so um so nothing's perfect I guess um |
|
|
| align:start position:0% |
| so um so nothing's perfect I guess um |
| |
|
|
| align:start position:0% |
| so um so nothing's perfect I guess um |
| you know every model is a |
|
|
| align:start position:0% |
| you know every model is a |
| |
|
|
| align:start position:0% |
| you know every model is a |
| benchmark almost every model is going to |
|
|
| align:start position:0% |
| benchmark almost every model is going to |
| |
|
|
| align:start position:0% |
| benchmark almost every model is going to |
| deliver something that might fit well |
|
|
| align:start position:0% |
| deliver something that might fit well |
| |
|
|
| align:start position:0% |
| deliver something that might fit well |
| otherwise we probably not reading it in |
|
|
| align:start position:0% |
| otherwise we probably not reading it in |
| |
|
|
| align:start position:0% |
| otherwise we probably not reading it in |
| a |
|
|
| align:start position:0% |
| a |
| |
|
|
| align:start position:0% |
| a |
| journal uh or it all may actually also |
|
|
| align:start position:0% |
| journal uh or it all may actually also |
| |
|
|
| align:start position:0% |
| journal uh or it all may actually also |
| generate things that are not consistent |
|
|
| align:start position:0% |
| generate things that are not consistent |
| |
|
|
| align:start position:0% |
| generate things that are not consistent |
| with the data and if you're a good |
|
|
| align:start position:0% |
| with the data and if you're a good |
| |
|
|
| align:start position:0% |
| with the data and if you're a good |
| scholar you're reporting that |
|
|
| align:start position:0% |
| scholar you're reporting that |
| |
|
|
| align:start position:0% |
| scholar you're reporting that |
| too |
|
|
| align:start position:0% |
| too |
| |
|
|
| align:start position:0% |
| too |
| um now what about the permanent |
|
|
| align:start position:0% |
| um now what about the permanent |
| |
|
|
| align:start position:0% |
| um now what about the permanent |
| income and the dispersion of income by |
|
|
| align:start position:0% |
| income and the dispersion of income by |
| |
|
|
| align:start position:0% |
| income and the dispersion of income by |
| age |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um so again disposable |
|
|
| align:start position:0% |
| um so again disposable |
| |
|
|
| align:start position:0% |
| um so again disposable |
| income takes on this |
|
|
| align:start position:0% |
| income takes on this |
| |
|
|
| align:start position:0% |
| income takes on this |
| form |
|
|
| align:start position:0% |
| form |
| |
|
|
| align:start position:0% |
| form |
| uh |
|
|
| align:start position:0% |
| uh |
| |
|
|
| align:start position:0% |
| uh |
| you know which is sort of asset return |
|
|
| align:start position:0% |
| you know which is sort of asset return |
| |
|
|
| align:start position:0% |
| you know which is sort of asset return |
| stream plus income and then you use it |
|
|
| align:start position:0% |
| stream plus income and then you use it |
| |
|
|
| align:start position:0% |
| stream plus income and then you use it |
| for consumption and savings adjusting |
|
|
| align:start position:0% |
| for consumption and savings adjusting |
| |
|
|
| align:start position:0% |
| for consumption and savings adjusting |
| for where you are in the life cycle or |
|
|
| align:start position:0% |
| for where you are in the life cycle or |
| |
|
|
| align:start position:0% |
| for where you are in the life cycle or |
| you could take the difference savings is |
|
|
| align:start position:0% |
| you could take the difference savings is |
| |
|
|
| align:start position:0% |
| you could take the difference savings is |
| a difference between income and this |
|
|
| align:start position:0% |
| a difference between income and this |
| |
|
|
| align:start position:0% |
| a difference between income and this |
| beta adjusted |
|
|
| align:start position:0% |
| beta adjusted |
| |
|
|
| align:start position:0% |
| beta adjusted |
| consumption and in some of these |
|
|
| align:start position:0% |
| consumption and in some of these |
| |
|
|
| align:start position:0% |
| consumption and in some of these |
| models you can get a close form |
|
|
| align:start position:0% |
| models you can get a close form |
| |
|
|
| align:start position:0% |
| models you can get a close form |
| expression for savings namely the |
|
|
| align:start position:0% |
| expression for savings namely the |
| |
|
|
| align:start position:0% |
| expression for savings namely the |
| so-called Campbell's rainy day which is |
|
|
| align:start position:0% |
| so-called Campbell's rainy day which is |
| |
|
|
| align:start position:0% |
| so-called Campbell's rainy day which is |
| really kind of cool |
|
|
| align:start position:0% |
| really kind of cool |
| |
|
|
| align:start position:0% |
| really kind of cool |
| uh which is you save enough at te to be |
|
|
| align:start position:0% |
| uh which is you save enough at te to be |
| |
|
|
| align:start position:0% |
| uh which is you save enough at te to be |
| able to cover the discounted |
|
|
| align:start position:0% |
| able to cover the discounted |
| |
|
|
| align:start position:0% |
| able to cover the discounted |
| shortfalls in uh sort of these earnings |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| Innovations so you want to smooth those |
|
|
| align:start position:0% |
| Innovations so you want to smooth those |
| |
|
|
| align:start position:0% |
| Innovations so you want to smooth those |
| out and you save just enough to do that |
|
|
| align:start position:0% |
| out and you save just enough to do that |
| |
|
|
| align:start position:0% |
| out and you save just enough to do that |
| in |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| expectation anyway |
|
|
| align:start position:0% |
| expectation anyway |
| |
|
|
| align:start position:0% |
| expectation anyway |
| so rewriting disposable |
|
|
| align:start position:0% |
| so rewriting disposable |
| |
|
|
| align:start position:0% |
| so rewriting disposable |
| income you know equal to the savings |
|
|
| align:start position:0% |
| income you know equal to the savings |
| |
|
|
| align:start position:0% |
| income you know equal to the savings |
| component we already had that you know |
|
|
| align:start position:0% |
| component we already had that you know |
| |
|
|
| align:start position:0% |
| component we already had that you know |
| uh you know less the savings uh plus the |
|
|
| align:start position:0% |
| uh you know less the savings uh plus the |
| |
|
|
| align:start position:0% |
| uh you know less the savings uh plus the |
| savings component sorry I get confused |
|
|
| align:start position:0% |
| savings component sorry I get confused |
| |
|
|
| align:start position:0% |
| savings component sorry I get confused |
| because savings was negative used to be |
|
|
| align:start position:0% |
| because savings was negative used to be |
| |
|
|
| align:start position:0% |
| because savings was negative used to be |
| here and now it's out |
|
|
| align:start position:0% |
| here and now it's out |
| |
|
|
| align:start position:0% |
| here and now it's out |
| here savings is not negative but these |
|
|
| align:start position:0% |
| here savings is not negative but these |
| |
|
|
| align:start position:0% |
| here savings is not negative but these |
| Innovations are negative because you |
|
|
| align:start position:0% |
| Innovations are negative because you |
| |
|
|
| align:start position:0% |
| Innovations are negative because you |
| save to cover shortfalls and then you |
|
|
| align:start position:0% |
| save to cover shortfalls and then you |
| |
|
|
| align:start position:0% |
| save to cover shortfalls and then you |
| get implications here |
|
|
| align:start position:0% |
| get implications here |
| |
|
|
| align:start position:0% |
| get implications here |
| for you |
|
|
| align:start position:0% |
| for you |
| |
|
|
| align:start position:0% |
| for you |
| know if one thing is a random walk and |
|
|
| align:start position:0% |
| know if one thing is a random walk and |
| |
|
|
| align:start position:0% |
| know if one thing is a random walk and |
| the other thing is a random walk then |
|
|
| align:start position:0% |
| the other thing is a random walk then |
| |
|
|
| align:start position:0% |
| the other thing is a random walk then |
| the sum of two things that are random |
|
|
| align:start position:0% |
| the sum of two things that are random |
| |
|
|
| align:start position:0% |
| the sum of two things that are random |
| walks is also a random |
|
|
| align:start position:0% |
| walks is also a random |
| |
|
|
| align:start position:0% |
| walks is also a random |
| walk uh |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so so basically savings ought to be |
|
|
| align:start position:0% |
| so so basically savings ought to be |
| |
|
|
| align:start position:0% |
| so so basically savings ought to be |
| stationary in that sense and it ought to |
|
|
| align:start position:0% |
| stationary in that sense and it ought to |
| |
|
|
| align:start position:0% |
| stationary in that sense and it ought to |
| be dispersing at the rate that |
|
|
| align:start position:0% |
| be dispersing at the rate that |
| |
|
|
| align:start position:0% |
| be dispersing at the rate that |
| consumption is |
|
|
| align:start position:0% |
| consumption is |
| |
|
|
| align:start position:0% |
| consumption is |
| dispersing and they don't see that in |
|
|
| align:start position:0% |
| dispersing and they don't see that in |
| |
|
|
| align:start position:0% |
| dispersing and they don't see that in |
| the data either |
|
|
| align:start position:0% |
| the data either |
| |
|
|
| align:start position:0% |
| the data either |
| um and well in particular earnings is |
|
|
| align:start position:0% |
| um and well in particular earnings is |
| |
|
|
| align:start position:0% |
| um and well in particular earnings is |
| dispersing |
|
|
| align:start position:0% |
| dispersing |
| |
|
|
| align:start position:0% |
| dispersing |
| so which is a point that was made on the |
|
|
| align:start position:0% |
| so which is a point that was made on the |
| |
|
|
| align:start position:0% |
| so which is a point that was made on the |
| on the other slide on the other slide as |
|
|
| align:start position:0% |
| on the other slide on the other slide as |
| |
|
|
| align:start position:0% |
| on the other slide on the other slide as |
| well |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um and then |
|
|
| align:start position:0% |
| um and then |
| |
|
|
| align:start position:0% |
| um and then |
| finally I guess this is like the fourth |
|
|
| align:start position:0% |
| finally I guess this is like the fourth |
| |
|
|
| align:start position:0% |
| finally I guess this is like the fourth |
| version of something that starts to look |
|
|
| align:start position:0% |
| version of something that starts to look |
| |
|
|
| align:start position:0% |
| version of something that starts to look |
| like the same |
|
|
| align:start position:0% |
| like the same |
| |
|
|
| align:start position:0% |
| like the same |
| thing uh most of the most of those |
|
|
| align:start position:0% |
| thing uh most of the most of those |
| |
|
|
| align:start position:0% |
| thing uh most of the most of those |
| analytically analytic Expressions we're |
|
|
| align:start position:0% |
| analytically analytic Expressions we're |
| |
|
|
| align:start position:0% |
| analytically analytic Expressions we're |
| assuming something like quadratic |
|
|
| align:start position:0% |
| assuming something like quadratic |
| |
|
|
| align:start position:0% |
| assuming something like quadratic |
| utility that's how you manage to get |
|
|
| align:start position:0% |
| utility that's how you manage to get |
| |
|
|
| align:start position:0% |
| utility that's how you manage to get |
| this really tight reduced form analytic |
|
|
| align:start position:0% |
| this really tight reduced form analytic |
| |
|
|
| align:start position:0% |
| this really tight reduced form analytic |
| expression if you don't do that if you |
|
|
| align:start position:0% |
| expression if you don't do that if you |
| |
|
|
| align:start position:0% |
| expression if you don't do that if you |
| have constant relative risk aversion for |
|
|
| align:start position:0% |
| have constant relative risk aversion for |
| |
|
|
| align:start position:0% |
| have constant relative risk aversion for |
| example or a more General utility |
|
|
| align:start position:0% |
| example or a more General utility |
| |
|
|
| align:start position:0% |
| example or a more General utility |
| function then the oiler equation |
|
|
| align:start position:0% |
| function then the oiler equation |
| |
|
|
| align:start position:0% |
| function then the oiler equation |
| basically is is going to equate the the |
|
|
| align:start position:0% |
| basically is is going to equate the the |
| |
|
|
| align:start position:0% |
| basically is is going to equate the the |
| marginal utility |
|
|
| align:start position:0% |
| marginal utility |
| |
|
|
| align:start position:0% |
| marginal utility |
| today to something like marginal utility |
|
|
| align:start position:0% |
| today to something like marginal utility |
| |
|
|
| align:start position:0% |
| today to something like marginal utility |
| tomorrow |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um you might say well where's the |
|
|
| align:start position:0% |
| um you might say well where's the |
| |
|
|
| align:start position:0% |
| um you might say well where's the |
| expectation operator well instead the |
|
|
| align:start position:0% |
| expectation operator well instead the |
| |
|
|
| align:start position:0% |
| expectation operator well instead the |
| shock is put over here on the right hand |
|
|
| align:start position:0% |
| shock is put over here on the right hand |
| |
|
|
| align:start position:0% |
| shock is put over here on the right hand |
| side so this is like an Oiler equation |
|
|
| align:start position:0% |
| side so this is like an Oiler equation |
| |
|
|
| align:start position:0% |
| side so this is like an Oiler equation |
| now if this were |
|
|
| align:start position:0% |
| now if this were |
| |
|
|
| align:start position:0% |
| now if this were |
| zero and the interest rate were equal to |
|
|
| align:start position:0% |
| zero and the interest rate were equal to |
| |
|
|
| align:start position:0% |
| zero and the interest rate were equal to |
| this you know Delta discount rate then |
|
|
| align:start position:0% |
| this you know Delta discount rate then |
| |
|
|
| align:start position:0% |
| this you know Delta discount rate then |
| basically the marginal utility of |
|
|
| align:start position:0% |
| basically the marginal utility of |
| |
|
|
| align:start position:0% |
| basically the marginal utility of |
| consumption if we could deduce it would |
|
|
| align:start position:0% |
| consumption if we could deduce it would |
| |
|
|
| align:start position:0% |
| consumption if we could deduce it would |
| be uh not going anywhere it would be the |
|
|
| align:start position:0% |
| be uh not going anywhere it would be the |
| |
|
|
| align:start position:0% |
| be uh not going anywhere it would be the |
| same over |
|
|
| align:start position:0% |
| same over |
| |
|
|
| align:start position:0% |
| same over |
| time |
|
|
| align:start position:0% |
| time |
| |
|
|
| align:start position:0% |
| time |
| but uh again with r equal to |
|
|
| align:start position:0% |
| but uh again with r equal to |
| |
|
|
| align:start position:0% |
| but uh again with r equal to |
| Delta we kick on this extra orthogonal |
|
|
| align:start position:0% |
| Delta we kick on this extra orthogonal |
| |
|
|
| align:start position:0% |
| Delta we kick on this extra orthogonal |
| shock which makes the marginal utility |
|
|
| align:start position:0% |
| shock which makes the marginal utility |
| |
|
|
| align:start position:0% |
| shock which makes the marginal utility |
| of consumption dispersing in the future |
|
|
| align:start position:0% |
| of consumption dispersing in the future |
| |
|
|
| align:start position:0% |
| of consumption dispersing in the future |
| relative today and you can even have you |
|
|
| align:start position:0% |
| relative today and you can even have you |
| |
|
|
| align:start position:0% |
| relative today and you can even have you |
| know R not equal to Delta as long as |
|
|
| align:start position:0% |
| know R not equal to Delta as long as |
| |
|
|
| align:start position:0% |
| know R not equal to Delta as long as |
| Delta is greater than than r |
|
|
| align:start position:0% |
| Delta is greater than than r |
| |
|
|
| align:start position:0% |
| Delta is greater than than r |
| the same logic |
|
|
| align:start position:0% |
| the same logic |
| |
|
|
| align:start position:0% |
| the same logic |
| applies because you're kind of like |
|
|
| align:start position:0% |
| applies because you're kind of like |
| |
|
|
| align:start position:0% |
| applies because you're kind of like |
| amplifying this |
|
|
| align:start position:0% |
| amplifying this |
| |
|
|
| align:start position:0% |
| amplifying this |
| thing carrying it through to tomorrow |
|
|
| align:start position:0% |
| thing carrying it through to tomorrow |
| |
|
|
| align:start position:0% |
| thing carrying it through to tomorrow |
| along with the U the U shock |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um so that's another way to get at the |
|
|
| align:start position:0% |
| um so that's another way to get at the |
| |
|
|
| align:start position:0% |
| um so that's another way to get at the |
| variance of consumption |
|
|
| align:start position:0% |
| variance of consumption |
| |
|
|
| align:start position:0% |
| variance of consumption |
| increasing |
|
|
| align:start position:0% |
| increasing |
| |
|
|
| align:start position:0% |
| increasing |
| [Music] |
|
|
| align:start position:0% |
| [Music] |
| |
|
|
| align:start position:0% |
| [Music] |
| um depending on what you assume about |
|
|
| align:start position:0% |
| um depending on what you assume about |
| |
|
|
| align:start position:0% |
| um depending on what you assume about |
| the utility function some functions |
|
|
| align:start position:0% |
| the utility function some functions |
| |
|
|
| align:start position:0% |
| the utility function some functions |
| though you know have |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| uh a force that go the other way in |
|
|
| align:start position:0% |
| uh a force that go the other way in |
| |
|
|
| align:start position:0% |
| uh a force that go the other way in |
| particular you know if you're really |
|
|
| align:start position:0% |
| particular you know if you're really |
| |
|
|
| align:start position:0% |
| particular you know if you're really |
| really into it you get into third |
|
|
| align:start position:0% |
| really into it you get into third |
| |
|
|
| align:start position:0% |
| really into it you get into third |
| derivatives uh but when you're really |
|
|
| align:start position:0% |
| derivatives uh but when you're really |
| |
|
|
| align:start position:0% |
| derivatives uh but when you're really |
| sort of cautious you know that |
|
|
| align:start position:0% |
| sort of cautious you know that |
| |
|
|
| align:start position:0% |
| sort of cautious you know that |
| Lambda is uh is |
|
|
| align:start position:0% |
| Lambda is uh is |
| |
|
|
| align:start position:0% |
| Lambda is uh is |
| convex you know so you're you're taking |
|
|
| align:start position:0% |
| convex you know so you're you're taking |
| |
|
|
| align:start position:0% |
| convex you know so you're you're taking |
| a second derivative of already the |
|
|
| align:start position:0% |
| a second derivative of already the |
| |
|
|
| align:start position:0% |
| a second derivative of already the |
| margin of utility that's what I comment |
|
|
| align:start position:0% |
| margin of utility that's what I comment |
| |
|
|
| align:start position:0% |
| margin of utility that's what I comment |
| about third derivatives of utility |
|
|
| align:start position:0% |
| about third derivatives of utility |
| |
|
|
| align:start position:0% |
| about third derivatives of utility |
| functions but but and that if you start |
|
|
| align:start position:0% |
| functions but but and that if you start |
| |
|
|
| align:start position:0% |
| functions but but and that if you start |
| staring at this thing can actually push |
|
|
| align:start position:0% |
| staring at this thing can actually push |
| |
|
|
| align:start position:0% |
| staring at this thing can actually push |
| you back against this dispersion disper |
|
|
| align:start position:0% |
| you back against this dispersion disper |
| |
|
|
| align:start position:0% |
| you back against this dispersion disper |
| dispersion of |
|
|
| align:start position:0% |
| dispersion of |
| |
|
|
| align:start position:0% |
| dispersion of |
| consumption |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so I you know I'm having a sense that |
|
|
| align:start position:0% |
| so I you know I'm having a sense that |
| |
|
|
| align:start position:0% |
| so I you know I'm having a sense that |
| just going on and on but the point is to |
|
|
| align:start position:0% |
| just going on and on but the point is to |
| |
|
|
| align:start position:0% |
| just going on and on but the point is to |
| take each of these different forces and |
|
|
| align:start position:0% |
| take each of these different forces and |
| |
|
|
| align:start position:0% |
| take each of these different forces and |
| then tell stories about what must be |
|
|
| align:start position:0% |
| then tell stories about what must be |
| |
|
|
| align:start position:0% |
| then tell stories about what must be |
| true in Taiwan versus Britain versus the |
|
|
| align:start position:0% |
| true in Taiwan versus Britain versus the |
| |
|
|
| align:start position:0% |
| true in Taiwan versus Britain versus the |
| US you know to try to rationalize what |
|
|
| align:start position:0% |
| US you know to try to rationalize what |
| |
|
|
| align:start position:0% |
| US you know to try to rationalize what |
| we're seeing in the |
|
|
| align:start position:0% |
| we're seeing in the |
| |
|
|
| align:start position:0% |
| we're seeing in the |
| data |
|
|
| align:start position:0% |
| data |
| |
|
|
| align:start position:0% |
| data |
| um and similarly |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| here okay so let's just say three words |
|
|
| align:start position:0% |
| here okay so let's just say three words |
| |
|
|
| align:start position:0% |
| here okay so let's just say three words |
| about excess |
|
|
| align:start position:0% |
| about excess |
| |
|
|
| align:start position:0% |
| about excess |
| smoothness |
|
|
| align:start position:0% |
| smoothness |
| |
|
|
| align:start position:0% |
| smoothness |
| um to repeat the life cycle model |
|
|
| align:start position:0% |
| um to repeat the life cycle model |
| |
|
|
| align:start position:0% |
| um to repeat the life cycle model |
| implies that shocks to permanent income |
|
|
| align:start position:0% |
| implies that shocks to permanent income |
| |
|
|
| align:start position:0% |
| implies that shocks to permanent income |
| should be fully incorporated into |
|
|
| align:start position:0% |
| should be fully incorporated into |
| |
|
|
| align:start position:0% |
| should be fully incorporated into |
| consumption |
|
|
| align:start position:0% |
| consumption |
| |
|
|
| align:start position:0% |
| consumption |
| uh while Innovations to to uh the |
|
|
| align:start position:0% |
| uh while Innovations to to uh the |
| |
|
|
| align:start position:0% |
| uh while Innovations to to uh the |
| transitory part are are |
|
|
| align:start position:0% |
| transitory part are are |
| |
|
|
| align:start position:0% |
| transitory part are are |
| not |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um you know basically all the all the |
|
|
| align:start position:0% |
| um you know basically all the all the |
| |
|
|
| align:start position:0% |
| um you know basically all the all the |
| income all the transitory income |
|
|
| align:start position:0% |
| income all the transitory income |
| |
|
|
| align:start position:0% |
| income all the transitory income |
| fluctuation should should not be |
|
|
| align:start position:0% |
| fluctuation should should not be |
| |
|
|
| align:start position:0% |
| fluctuation should should not be |
| appearing in consumption which actually |
|
|
| align:start position:0% |
| appearing in consumption which actually |
| |
|
|
| align:start position:0% |
| appearing in consumption which actually |
| is something we've talked about with |
|
|
| align:start position:0% |
| is something we've talked about with |
| |
|
|
| align:start position:0% |
| is something we've talked about with |
| regards to the full risk sharing model |
|
|
| align:start position:0% |
| regards to the full risk sharing model |
| |
|
|
| align:start position:0% |
| regards to the full risk sharing model |
| except there we didn't make this |
|
|
| align:start position:0% |
| except there we didn't make this |
| |
|
|
| align:start position:0% |
| except there we didn't make this |
| distinction between transitory and |
|
|
| align:start position:0% |
| distinction between transitory and |
| |
|
|
| align:start position:0% |
| distinction between transitory and |
| permanent |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um but when they go and look at the data |
|
|
| align:start position:0% |
| um but when they go and look at the data |
| |
|
|
| align:start position:0% |
| um but when they go and look at the data |
| they say hey consumption is too smooth |
|
|
| align:start position:0% |
| they say hey consumption is too smooth |
| |
|
|
| align:start position:0% |
| they say hey consumption is too smooth |
| it doesn't react to Innovations in the |
|
|
| align:start position:0% |
| it doesn't react to Innovations in the |
| |
|
|
| align:start position:0% |
| it doesn't react to Innovations in the |
| permanent component of income and other |
|
|
| align:start position:0% |
| permanent component of income and other |
| |
|
|
| align:start position:0% |
| permanent component of income and other |
| people have uh have found something |
|
|
| align:start position:0% |
| people have uh have found something |
| |
|
|
| align:start position:0% |
| people have uh have found something |
| similar |
|
|
| align:start position:0% |
| similar |
| |
|
|
| align:start position:0% |
| similar |
| um and we're inching forward to models |
|
|
| align:start position:0% |
| um and we're inching forward to models |
| |
|
|
| align:start position:0% |
| um and we're inching forward to models |
| where we're going to we're going to need |
|
|
| align:start position:0% |
| where we're going to we're going to need |
| |
|
|
| align:start position:0% |
| where we're going to we're going to need |
| to modify the models we're going to have |
|
|
| align:start position:0% |
| to modify the models we're going to have |
| |
|
|
| align:start position:0% |
| to modify the models we're going to have |
| to introduce something else like private |
|
|
| align:start position:0% |
| to introduce something else like private |
| |
|
|
| align:start position:0% |
| to introduce something else like private |
| information |
|
|
| align:start position:0% |
| information |
| |
|
|
| align:start position:0% |
| information |
| uh and more on that in a |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| second yep we always assume the market |
|
|
| align:start position:0% |
| second yep we always assume the market |
| |
|
|
| align:start position:0% |
| second yep we always assume the market |
| is incomplete so maybe just because the |
|
|
| align:start position:0% |
| is incomplete so maybe just because the |
| |
|
|
| align:start position:0% |
| is incomplete so maybe just because the |
| market is is relatively complete so uh |
|
|
| align:start position:0% |
| market is is relatively complete so uh |
| |
|
|
| align:start position:0% |
| market is is relatively complete so uh |
| the consumers can this so that's my gut |
|
|
| align:start position:0% |
| the consumers can this so that's my gut |
| |
|
|
| align:start position:0% |
| the consumers can this so that's my gut |
| reaction |
|
|
| align:start position:0% |
| reaction |
| |
|
|
| align:start position:0% |
| reaction |
| although well |
|
|
| align:start position:0% |
| although well |
| |
|
|
| align:start position:0% |
| although well |
| actually so this this pavoni paper you |
|
|
| align:start position:0% |
| actually so this this pavoni paper you |
| |
|
|
| align:start position:0% |
| actually so this this pavoni paper you |
| know puts in sort of some unobserved |
|
|
| align:start position:0% |
| know puts in sort of some unobserved |
| |
|
|
| align:start position:0% |
| know puts in sort of some unobserved |
| savings and and other things and it it |
|
|
| align:start position:0% |
| savings and and other things and it it |
| |
|
|
| align:start position:0% |
| savings and and other things and it it |
| actually comes close to the data so it |
|
|
| align:start position:0% |
| actually comes close to the data so it |
| |
|
|
| align:start position:0% |
| actually comes close to the data so it |
| isn't all the way toward full insurance |
|
|
| align:start position:0% |
| isn't all the way toward full insurance |
| |
|
|
| align:start position:0% |
| isn't all the way toward full insurance |
| but it is more full insurance than what |
|
|
| align:start position:0% |
| but it is more full insurance than what |
| |
|
|
| align:start position:0% |
| but it is more full insurance than what |
| these models |
|
|
| align:start position:0% |
| these models |
| |
|
|
| align:start position:0% |
| these models |
| imply so trying to reconcile the |
|
|
| align:start position:0% |
| imply so trying to reconcile the |
| |
|
|
| align:start position:0% |
| imply so trying to reconcile the |
| puzzle |
|
|
| align:start position:0% |
| puzzle |
| |
|
|
| align:start position:0% |
| puzzle |
| uh I'd like to think I'm you know quite |
|
|
| align:start position:0% |
| uh I'd like to think I'm you know quite |
| |
|
|
| align:start position:0% |
| uh I'd like to think I'm you know quite |
| agnostic uh you know in my rural tie |
|
|
| align:start position:0% |
| agnostic uh you know in my rural tie |
| |
|
|
| align:start position:0% |
| agnostic uh you know in my rural tie |
| data certainly when you include other |
|
|
| align:start position:0% |
| data certainly when you include other |
| |
|
|
| align:start position:0% |
| data certainly when you include other |
| variables and not just assumption we see |
|
|
| align:start position:0% |
| variables and not just assumption we see |
| |
|
|
| align:start position:0% |
| variables and not just assumption we see |
| rejections of full risk sharing I'm not |
|
|
| align:start position:0% |
| rejections of full risk sharing I'm not |
| |
|
|
| align:start position:0% |
| rejections of full risk sharing I'm not |
| you know determined to always find full |
|
|
| align:start position:0% |
| you know determined to always find full |
| |
|
|
| align:start position:0% |
| you know determined to always find full |
| risk sharing in the data but |
|
|
| align:start position:0% |
| risk sharing in the data but |
| |
|
|
| align:start position:0% |
| risk sharing in the data but |
| likewise I I would hope these guys |
|
|
| align:start position:0% |
| likewise I I would hope these guys |
| |
|
|
| align:start position:0% |
| likewise I I would hope these guys |
| aren't clinging to the permanent income |
|
|
| align:start position:0% |
| aren't clinging to the permanent income |
| |
|
|
| align:start position:0% |
| aren't clinging to the permanent income |
| model as the only game in town because |
|
|
| align:start position:0% |
| model as the only game in town because |
| |
|
|
| align:start position:0% |
| model as the only game in town because |
| it's clearly also you know suffering |
|
|
| align:start position:0% |
| it's clearly also you know suffering |
| |
|
|
| align:start position:0% |
| it's clearly also you know suffering |
| from its its own sort of anomalies |
|
|
| align:start position:0% |
| from its its own sort of anomalies |
| |
|
|
| align:start position:0% |
| from its its own sort of anomalies |
| relative to the data and you know and |
|
|
| align:start position:0% |
| relative to the data and you know and |
| |
|
|
| align:start position:0% |
| relative to the data and you know and |
| there's no reason to think that it has |
|
|
| align:start position:0% |
| there's no reason to think that it has |
| |
|
|
| align:start position:0% |
| there's no reason to think that it has |
| to be the same model for every village |
|
|
| align:start position:0% |
| to be the same model for every village |
| |
|
|
| align:start position:0% |
| to be the same model for every village |
| or every |
|
|
| align:start position:0% |
| or every |
| |
|
|
| align:start position:0% |
| or every |
| country and |
|
|
| align:start position:0% |
| country and |
| |
|
|
| align:start position:0% |
| country and |
| and and actually Deon and Paxton stuff |
|
|
| align:start position:0% |
| and and actually Deon and Paxton stuff |
| |
|
|
| align:start position:0% |
| and and actually Deon and Paxton stuff |
| looking at the cross-sections kind of |
|
|
| align:start position:0% |
| looking at the cross-sections kind of |
| |
|
|
| align:start position:0% |
| looking at the cross-sections kind of |
| saying that it's different it could be |
|
|
| align:start position:0% |
| saying that it's different it could be |
| |
|
|
| align:start position:0% |
| saying that it's different it could be |
| different in different countries if |
|
|
| align:start position:0% |
| different in different countries if |
| |
|
|
| align:start position:0% |
| different in different countries if |
| you're going to try to reconcile The |
|
|
| align:start position:0% |
| you're going to try to reconcile The |
| |
|
|
| align:start position:0% |
| you're going to try to reconcile The |
| observed |
|
|
| align:start position:0% |
| observed |
| |
|
|
| align:start position:0% |
| observed |
| movements |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um but anyway you guys need to know |
|
|
| align:start position:0% |
| um but anyway you guys need to know |
| |
|
|
| align:start position:0% |
| um but anyway you guys need to know |
| about this literature I mean you know |
|
|
| align:start position:0% |
| about this literature I mean you know |
| |
|
|
| align:start position:0% |
| about this literature I mean you know |
| you need you need to have a view of the |
|
|
| align:start position:0% |
| you need you need to have a view of the |
| |
|
|
| align:start position:0% |
| you need you need to have a view of the |
| different consumption smoothing |
|
|
| align:start position:0% |
| different consumption smoothing |
| |
|
|
| align:start position:0% |
| different consumption smoothing |
| literature I guess I should also say you |
|
|
| align:start position:0% |
| literature I guess I should also say you |
| |
|
|
| align:start position:0% |
| literature I guess I should also say you |
| know sort |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| of you know it looks as though it's a |
|
|
| align:start position:0% |
| of you know it looks as though it's a |
| |
|
|
| align:start position:0% |
| of you know it looks as though it's a |
| macro is ussh literature but that's not |
|
|
| align:start position:0% |
| macro is ussh literature but that's not |
| |
|
|
| align:start position:0% |
| macro is ussh literature but that's not |
| true certainly for Paxton and Deon who |
|
|
| align:start position:0% |
| true certainly for Paxton and Deon who |
| |
|
|
| align:start position:0% |
| true certainly for Paxton and Deon who |
| are you know Avid development economists |
|
|
| align:start position:0% |
| are you know Avid development economists |
| |
|
|
| align:start position:0% |
| are you know Avid development economists |
| and looking at uh at data from |
|
|
| align:start position:0% |
| and looking at uh at data from |
| |
|
|
| align:start position:0% |
| and looking at uh at data from |
| developing countries and likewise the |
|
|
| align:start position:0% |
| developing countries and likewise the |
| |
|
|
| align:start position:0% |
| developing countries and likewise the |
| initial you know risk sharing stuff that |
|
|
| align:start position:0% |
| initial you know risk sharing stuff that |
| |
|
|
| align:start position:0% |
| initial you know risk sharing stuff that |
| wasn't peculiar to development that was |
|
|
| align:start position:0% |
| wasn't peculiar to development that was |
| |
|
|
| align:start position:0% |
| wasn't peculiar to development that was |
| being tested by Cochran and mace and so |
|
|
| align:start position:0% |
| being tested by Cochran and mace and so |
| |
|
|
| align:start position:0% |
| being tested by Cochran and mace and so |
| on in US data so you know there's really |
|
|
| align:start position:0% |
| on in US data so you know there's really |
| |
|
|
| align:start position:0% |
| on in US data so you know there's really |
| never been this idea that somehow macro |
|
|
| align:start position:0% |
| never been this idea that somehow macro |
| |
|
|
| align:start position:0% |
| never been this idea that somehow macro |
| is in one room using one subset of data |
|
|
| align:start position:0% |
| is in one room using one subset of data |
| |
|
|
| align:start position:0% |
| is in one room using one subset of data |
| and micro is in another room using |
|
|
| align:start position:0% |
| and micro is in another room using |
| |
|
|
| align:start position:0% |
| and micro is in another room using |
| another subset that would be rather |
|
|
| align:start position:0% |
| another subset that would be rather |
| |
|
|
| align:start position:0% |
| another subset that would be rather |
| silly so we really need to |
|
|
| align:start position:0% |
| silly so we really need to |
| |
|
|
| align:start position:0% |
| silly so we really need to |
| know how all these models |
|
|
| align:start position:0% |
| know how all these models |
| |
|
|
| align:start position:0% |
| know how all these models |
| work uh okay |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so so this is again Campbell's you know |
|
|
| align:start position:0% |
| so so this is again Campbell's you know |
| |
|
|
| align:start position:0% |
| so so this is again Campbell's you know |
| saving for a rainy |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| day uh it's repeated because it's a |
|
|
| align:start position:0% |
| day uh it's repeated because it's a |
| |
|
|
| align:start position:0% |
| day uh it's repeated because it's a |
| different |
|
|
| align:start position:0% |
| different |
| |
|
|
| align:start position:0% |
| different |
| paper |
|
|
| align:start position:0% |
| paper |
| |
|
|
| align:start position:0% |
| paper |
| um they look at Campbell and Deon now |
|
|
| align:start position:0% |
| um they look at Campbell and Deon now |
| |
|
|
| align:start position:0% |
| um they look at Campbell and Deon now |
| are looking at |
|
|
| align:start position:0% |
| are looking at |
| |
|
|
| align:start position:0% |
| are looking at |
| uh us |
|
|
| align:start position:0% |
| uh us |
| |
|
|
| align:start position:0% |
| uh us |
| data and saying the labor income is |
|
|
| align:start position:0% |
| data and saying the labor income is |
| |
|
|
| align:start position:0% |
| data and saying the labor income is |
| described by this autor regressive |
|
|
| align:start position:0% |
| described by this autor regressive |
| |
|
|
| align:start position:0% |
| described by this autor regressive |
| process with a positive you know serial |
|
|
| align:start position:0% |
| process with a positive you know serial |
| |
|
|
| align:start position:0% |
| process with a positive you know serial |
| correlation |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| uh and what that means is |
|
|
| align:start position:0% |
| uh and what that means is |
| |
|
|
| align:start position:0% |
| uh and what that means is |
| Innovations are quote unquote more than |
|
|
| align:start position:0% |
| Innovations are quote unquote more than |
| |
|
|
| align:start position:0% |
| Innovations are quote unquote more than |
| permanent not just random walk is but |
|
|
| align:start position:0% |
| permanent not just random walk is but |
| |
|
|
| align:start position:0% |
| permanent not just random walk is but |
| basically now now you get even into more |
|
|
| align:start position:0% |
| basically now now you get even into more |
| |
|
|
| align:start position:0% |
| basically now now you get even into more |
| trouble because if consumption should |
|
|
| align:start position:0% |
| trouble because if consumption should |
| |
|
|
| align:start position:0% |
| trouble because if consumption should |
| reflect the Innovations to permanent |
|
|
| align:start position:0% |
| reflect the Innovations to permanent |
| |
|
|
| align:start position:0% |
| reflect the Innovations to permanent |
| income and what you see in Innovations |
|
|
| align:start position:0% |
| income and what you see in Innovations |
| |
|
|
| align:start position:0% |
| income and what you see in Innovations |
| is is more than permanent that means |
|
|
| align:start position:0% |
| is is more than permanent that means |
| |
|
|
| align:start position:0% |
| is is more than permanent that means |
| consumption should respond even |
|
|
| align:start position:0% |
| consumption should respond even |
| |
|
|
| align:start position:0% |
| consumption should respond even |
| more and it's not in the data responding |
|
|
| align:start position:0% |
| more and it's not in the data responding |
| |
|
|
| align:start position:0% |
| more and it's not in the data responding |
| that much it's much less |
|
|
| align:start position:0% |
| that much it's much less |
| |
|
|
| align:start position:0% |
| that much it's much less |
| variable um so either they're getting |
|
|
| align:start position:0% |
| variable um so either they're getting |
| |
|
|
| align:start position:0% |
| variable um so either they're getting |
| this fact wrong or again maybe you know |
|
|
| align:start position:0% |
| this fact wrong or again maybe you know |
| |
|
|
| align:start position:0% |
| this fact wrong or again maybe you know |
| the households have more information |
|
|
| align:start position:0% |
| the households have more information |
| |
|
|
| align:start position:0% |
| the households have more information |
| somehow uh or they have stupid |
|
|
| align:start position:0% |
| somehow uh or they have stupid |
| |
|
|
| align:start position:0% |
| somehow uh or they have stupid |
| expectations or or whatever these guys |
|
|
| align:start position:0% |
| expectations or or whatever these guys |
| |
|
|
| align:start position:0% |
| expectations or or whatever these guys |
| were not able to resolve the puzzle I |
|
|
| align:start position:0% |
| were not able to resolve the puzzle I |
| |
|
|
| align:start position:0% |
| were not able to resolve the puzzle I |
| mean if you want to see the equations |
|
|
| align:start position:0% |
| mean if you want to see the equations |
| |
|
|
| align:start position:0% |
| mean if you want to see the equations |
| there they are I'm not sure at this |
|
|
| align:start position:0% |
| there they are I'm not sure at this |
| |
|
|
| align:start position:0% |
| there they are I'm not sure at this |
| point that it adds all that much more to |
|
|
| align:start position:0% |
| point that it adds all that much more to |
| |
|
|
| align:start position:0% |
| point that it adds all that much more to |
| the discussion um |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| and this is what I was saying about |
|
|
| align:start position:0% |
| and this is what I was saying about |
| |
|
|
| align:start position:0% |
| and this is what I was saying about |
| atanasio and |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| pavoni |
|
|
| align:start position:0% |
| pavoni |
| |
|
|
| align:start position:0% |
| pavoni |
| So the plan is |
|
|
| align:start position:0% |
| So the plan is |
| |
|
|
| align:start position:0% |
| So the plan is |
| uh there's a little more coming today |
|
|
| align:start position:0% |
| uh there's a little more coming today |
| |
|
|
| align:start position:0% |
| uh there's a little more coming today |
| don't worry but uh or you might say OD |
|
|
| align:start position:0% |
| don't worry but uh or you might say OD |
| |
|
|
| align:start position:0% |
| don't worry but uh or you might say OD |
| darn but uh but the plan in the in the |
|
|
| align:start position:0% |
| darn but uh but the plan in the in the |
| |
|
|
| align:start position:0% |
| darn but uh but the plan in the in the |
| ordering of the lectures is to do labor |
|
|
| align:start position:0% |
| ordering of the lectures is to do labor |
| |
|
|
| align:start position:0% |
| ordering of the lectures is to do labor |
| uh and wage you know wage variation and |
|
|
| align:start position:0% |
| uh and wage you know wage variation and |
| |
|
|
| align:start position:0% |
| uh and wage you know wage variation and |
| smoothing adding labor Supply to a |
|
|
| align:start position:0% |
| smoothing adding labor Supply to a |
| |
|
|
| align:start position:0% |
| smoothing adding labor Supply to a |
| consumption model and talk about |
|
|
| align:start position:0% |
| consumption model and talk about |
| |
|
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| align:start position:0% |
| consumption model and talk about |
| elasticities and |
|
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| align:start position:0% |
| elasticities and |
| |
|
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| align:start position:0% |
| elasticities and |
| sensitivities that will be done with |
|
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| align:start position:0% |
| sensitivities that will be done with |
| |
|
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| align:start position:0% |
| sensitivities that will be done with |
| both the full risk sharing model as well |
|
|
| align:start position:0% |
| both the full risk sharing model as well |
| |
|
|
| align:start position:0% |
| both the full risk sharing model as well |
| as a version of these incomplete Market |
|
|
| align:start position:0% |
| as a version of these incomplete Market |
| |
|
|
| align:start position:0% |
| as a version of these incomplete Market |
| models so we'll see what survives you |
|
|
| align:start position:0% |
| models so we'll see what survives you |
| |
|
|
| align:start position:0% |
| models so we'll see what survives you |
| know depending on what you assume about |
|
|
| align:start position:0% |
| know depending on what you assume about |
| |
|
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| align:start position:0% |
| know depending on what you assume about |
| the market structure and then we're |
|
|
| align:start position:0% |
| the market structure and then we're |
| |
|
|
| align:start position:0% |
| the market structure and then we're |
| going to go |
|
|
| align:start position:0% |
| going to go |
| |
|
|
| align:start position:0% |
| going to go |
| to have a whole lecture on you know |
|
|
| align:start position:0% |
| to have a whole lecture on you know |
| |
|
|
| align:start position:0% |
| to have a whole lecture on you know |
| models that are much more explicit about |
|
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| align:start position:0% |
| models that are much more explicit about |
| |
|
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| align:start position:0% |
| models that are much more explicit about |
| moral hazard you know unobserved |
|
|
| align:start position:0% |
| moral hazard you know unobserved |
| |
|
|
| align:start position:0% |
| moral hazard you know unobserved |
| income and so on uh and this provon |
|
|
| align:start position:0% |
| income and so on uh and this provon |
| |
|
|
| align:start position:0% |
| income and so on uh and this provon |
| paper is one of them in that literature |
|
|
| align:start position:0% |
| paper is one of them in that literature |
| |
|
|
| align:start position:0% |
| paper is one of them in that literature |
| we're not going to cover it in class |
|
|
| align:start position:0% |
| we're not going to cover it in class |
| |
|
|
| align:start position:0% |
| we're not going to cover it in class |
| but okay |
|
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| align:start position:0% |
| |
| |
|
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| align:start position:0% |
| |
| so so |
|
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| align:start position:0% |
| |
| |
|
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| align:start position:0% |
| |
| actually so the front part of the |
|
|
| align:start position:0% |
| actually so the front part of the |
| |
|
|
| align:start position:0% |
| actually so the front part of the |
| lecture was out was about this BPP was |
|
|
| align:start position:0% |
| lecture was out was about this BPP was |
| |
|
|
| align:start position:0% |
| lecture was out was about this BPP was |
| probably a bit mysterious what it was uh |
|
|
| align:start position:0% |
| probably a bit mysterious what it was uh |
| |
|
|
| align:start position:0% |
| probably a bit mysterious what it was uh |
| so we can review that for a |
|
|
| align:start position:0% |
| so we can review that for a |
| |
|
|
| align:start position:0% |
| so we can review that for a |
| second |
|
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| align:start position:0% |
| second |
| |
|
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| align:start position:0% |
| second |
| uh the idea is that you postulate |
|
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| align:start position:0% |
| uh the idea is that you postulate |
| |
|
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| align:start position:0% |
| uh the idea is that you postulate |
| that um that log of |
|
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| align:start position:0% |
| |
| |
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| align:start position:0% |
| |
| earnings takes on this |
|
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| align:start position:0% |
| earnings takes on this |
| |
|
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| align:start position:0% |
| earnings takes on this |
| process where X is a vector of shot a is |
|
|
| align:start position:0% |
| process where X is a vector of shot a is |
| |
|
|
| align:start position:0% |
| process where X is a vector of shot a is |
| some Vector of |
|
|
| align:start position:0% |
| some Vector of |
| |
|
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| align:start position:0% |
| some Vector of |
| coefficients uh the shocks are |
|
|
| align:start position:0% |
| coefficients uh the shocks are |
| |
|
|
| align:start position:0% |
| coefficients uh the shocks are |
| IID the X's |
|
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| align:start position:0% |
| IID the X's |
| |
|
|
| align:start position:0% |
| IID the X's |
| are and they have you know |
|
|
| align:start position:0% |
| are and they have you know |
| |
|
|
| align:start position:0% |
| are and they have you know |
| variances uh you know this |
|
|
| align:start position:0% |
| variances uh you know this |
| |
|
|
| align:start position:0% |
| variances uh you know this |
| allows whole bunches of stuff not only |
|
|
| align:start position:0% |
| allows whole bunches of stuff not only |
| |
|
|
| align:start position:0% |
| allows whole bunches of stuff not only |
| just random walks but |
|
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| align:start position:0% |
| just random walks but |
| |
|
|
| align:start position:0% |
| just random walks but |
| uh autor regressive integrated moving |
|
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| align:start position:0% |
| uh autor regressive integrated moving |
| |
|
|
| align:start position:0% |
| uh autor regressive integrated moving |
| average uh uh processes on on income |
|
|
| align:start position:0% |
| average uh uh processes on on income |
| |
|
|
| align:start position:0% |
| average uh uh processes on on income |
| this is what you |
|
|
| align:start position:0% |
| this is what you |
| |
|
|
| align:start position:0% |
| this is what you |
| see uh and then you know this General |
|
|
| align:start position:0% |
| see uh and then you know this General |
| |
|
|
| align:start position:0% |
| see uh and then you know this General |
| formulation allows a bunch of |
|
|
| align:start position:0% |
| formulation allows a bunch of |
| |
|
|
| align:start position:0% |
| formulation allows a bunch of |
| uh different specifications which |
|
|
| align:start position:0% |
| uh different specifications which |
| |
|
|
| align:start position:0% |
| uh different specifications which |
| they're going to try to |
|
|
| align:start position:0% |
| they're going to try to |
| |
|
|
| align:start position:0% |
| they're going to try to |
| estimate |
|
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| align:start position:0% |
| estimate |
| |
|
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| align:start position:0% |
| estimate |
| [Music] |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um and and and somehow what they want to |
|
|
| align:start position:0% |
| um and and and somehow what they want to |
| |
|
|
| align:start position:0% |
| um and and and somehow what they want to |
| back |
|
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| align:start position:0% |
| back |
| |
|
|
| align:start position:0% |
| back |
| out is this insurance coefficient so |
|
|
| align:start position:0% |
| out is this insurance coefficient so |
| |
|
|
| align:start position:0% |
| out is this insurance coefficient so |
| here's you know again how it's easy to |
|
|
| align:start position:0% |
| here's you know again how it's easy to |
| |
|
|
| align:start position:0% |
| here's you know again how it's easy to |
| get turned around this is how sort of |
|
|
| align:start position:0% |
| get turned around this is how sort of |
| |
|
|
| align:start position:0% |
| get turned around this is how sort of |
| like quote unquote a regression |
|
|
| align:start position:0% |
| like quote unquote a regression |
| |
|
|
| align:start position:0% |
| like quote unquote a regression |
| coefficient of how consumption is moving |
|
|
| align:start position:0% |
| coefficient of how consumption is moving |
| |
|
|
| align:start position:0% |
| coefficient of how consumption is moving |
| with this particular |
|
|
| align:start position:0% |
| with this particular |
| |
|
|
| align:start position:0% |
| with this particular |
| shock inferred |
|
|
| align:start position:0% |
| shock inferred |
| |
|
|
| align:start position:0% |
| shock inferred |
| somehow but one minus that is then the |
|
|
| align:start position:0% |
| somehow but one minus that is then the |
| |
|
|
| align:start position:0% |
| somehow but one minus that is then the |
| degree of |
|
|
| align:start position:0% |
| degree of |
| |
|
|
| align:start position:0% |
| degree of |
| insurance because when consumption |
|
|
| align:start position:0% |
| insurance because when consumption |
| |
|
|
| align:start position:0% |
| insurance because when consumption |
| doesn't move with that shock this is |
|
|
| align:start position:0% |
| doesn't move with that shock this is |
| |
|
|
| align:start position:0% |
| doesn't move with that shock this is |
| zero and so insurance is like perfect |
|
|
| align:start position:0% |
| zero and so insurance is like perfect |
| |
|
|
| align:start position:0% |
| zero and so insurance is like perfect |
| measured at |
|
|
| align:start position:0% |
| measured at |
| |
|
|
| align:start position:0% |
| measured at |
| one |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| and you could put te's on these things |
|
|
| align:start position:0% |
| and you could put te's on these things |
| |
|
|
| align:start position:0% |
| and you could put te's on these things |
| if you sort the |
|
|
| align:start position:0% |
| if you sort the |
| |
|
|
| align:start position:0% |
| if you sort the |
| data by |
|
|
| align:start position:0% |
| data by |
| |
|
|
| align:start position:0% |
| data by |
| age which came up |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| earlier so we don't really see all |
|
|
| align:start position:0% |
| earlier so we don't really see all |
| |
|
|
| align:start position:0% |
| earlier so we don't really see all |
| those |
|
|
| align:start position:0% |
| those |
| |
|
|
| align:start position:0% |
| those |
| uh you know know permanent versus |
|
|
| align:start position:0% |
| uh you know know permanent versus |
| |
|
|
| align:start position:0% |
| uh you know know permanent versus |
| transitory |
|
|
| align:start position:0% |
| transitory |
| |
|
|
| align:start position:0% |
| transitory |
| shocks uh we kind of have to infer them |
|
|
| align:start position:0% |
| shocks uh we kind of have to infer them |
| |
|
|
| align:start position:0% |
| shocks uh we kind of have to infer them |
| [Music] |
|
|
| align:start position:0% |
| [Music] |
| |
|
|
| align:start position:0% |
| [Music] |
| somehow |
|
|
| align:start position:0% |
| somehow |
| |
|
|
| align:start position:0% |
| somehow |
| uh and this is a bit |
|
|
| align:start position:0% |
| uh and this is a bit |
| |
|
|
| align:start position:0% |
| uh and this is a bit |
| like |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um you know using |
|
|
| align:start position:0% |
| um you know using |
| |
|
|
| align:start position:0% |
| um you know using |
| some assumed function on the income |
|
|
| align:start position:0% |
| some assumed function on the income |
| |
|
|
| align:start position:0% |
| some assumed function on the income |
| process uh |
|
|
| align:start position:0% |
| process uh |
| |
|
|
| align:start position:0% |
| process uh |
| um and then filtering the data through |
|
|
| align:start position:0% |
| um and then filtering the data through |
| |
|
|
| align:start position:0% |
| um and then filtering the data through |
| that function and looking at the |
|
|
| align:start position:0% |
| that function and looking at the |
| |
|
|
| align:start position:0% |
| that function and looking at the |
| covariance with with income |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| change but they don't just do three |
|
|
| align:start position:0% |
| change but they don't just do three |
| |
|
|
| align:start position:0% |
| change but they don't just do three |
| alone because this would |
|
|
| align:start position:0% |
| alone because this would |
| |
|
|
| align:start position:0% |
| alone because this would |
| be uh you know a statement about income |
|
|
| align:start position:0% |
| be uh you know a statement about income |
| |
|
|
| align:start position:0% |
| be uh you know a statement about income |
| alone they they jointly |
|
|
| align:start position:0% |
| alone they they jointly |
| |
|
|
| align:start position:0% |
| alone they they jointly |
| estimate this function G |
|
|
| align:start position:0% |
| estimate this function G |
| |
|
|
| align:start position:0% |
| estimate this function G |
| essentially jointly with consumption |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| so for |
|
|
| align:start position:0% |
| so for |
| |
|
|
| align:start position:0% |
| so for |
| example uh if you assume |
|
|
| align:start position:0% |
| example uh if you assume |
| |
|
|
| align:start position:0% |
| example uh if you assume |
| income took on this classic form that |
|
|
| align:start position:0% |
| income took on this classic form that |
| |
|
|
| align:start position:0% |
| income took on this classic form that |
| that we were actually tracking through |
|
|
| align:start position:0% |
| that we were actually tracking through |
| |
|
|
| align:start position:0% |
| that we were actually tracking through |
| the lectures then income would be the |
|
|
| align:start position:0% |
| the lectures then income would be the |
| |
|
|
| align:start position:0% |
| the lectures then income would be the |
| sum of |
|
|
| align:start position:0% |
| sum of |
| |
|
|
| align:start position:0% |
| sum of |
| a a random walk with its own Innovation |
|
|
| align:start position:0% |
| a a random walk with its own Innovation |
| |
|
|
| align:start position:0% |
| a a random walk with its own Innovation |
| and variance and Epsilon which would be |
|
|
| align:start position:0% |
| and variance and Epsilon which would be |
| |
|
|
| align:start position:0% |
| and variance and Epsilon which would be |
| this IID transitory |
|
|
| align:start position:0% |
| this IID transitory |
| |
|
|
| align:start position:0% |
| this IID transitory |
| shock uh if you believe this to be the |
|
|
| align:start position:0% |
| shock uh if you believe this to be the |
| |
|
|
| align:start position:0% |
| shock uh if you believe this to be the |
| structure and there are many many other |
|
|
| align:start position:0% |
| structure and there are many many other |
| |
|
|
| align:start position:0% |
| structure and there are many many other |
| candidates Ates then you take a first |
|
|
| align:start position:0% |
| candidates Ates then you take a first |
| |
|
|
| align:start position:0% |
| candidates Ates then you take a first |
| difference and uh you know by |
|
|
| align:start position:0% |
| difference and uh you know by |
| |
|
|
| align:start position:0% |
| difference and uh you know by |
| construction then what would be left |
|
|
| align:start position:0% |
| construction then what would be left |
| |
|
|
| align:start position:0% |
| construction then what would be left |
| would be this innovation in |
|
|
| align:start position:0% |
| would be this innovation in |
| |
|
|
| align:start position:0% |
| would be this innovation in |
| the in the permanent |
|
|
| align:start position:0% |
| the in the permanent |
| |
|
|
| align:start position:0% |
| the in the permanent |
| part and a time difference in the |
|
|
| align:start position:0% |
| part and a time difference in the |
| |
|
|
| align:start position:0% |
| part and a time difference in the |
| transitory part which is still |
|
|
| align:start position:0% |
| transitory part which is still |
| |
|
|
| align:start position:0% |
| transitory part which is still |
| transitory |
|
|
| align:start position:0% |
| transitory |
| |
|
|
| align:start position:0% |
| transitory |
| [Music] |
|
|
| align:start position:0% |
| [Music] |
| |
|
|
| align:start position:0% |
| [Music] |
| um so then the consumption model tells |
|
|
| align:start position:0% |
| um so then the consumption model tells |
| |
|
|
| align:start position:0% |
| um so then the consumption model tells |
| you |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| about |
|
|
| align:start position:0% |
| about |
| |
|
|
| align:start position:0% |
| about |
| puts |
|
|
| align:start position:0% |
| puts |
| |
|
|
| align:start position:0% |
| puts |
| restrictions |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| um on how you know the change in |
|
|
| align:start position:0% |
| um on how you know the change in |
| |
|
|
| align:start position:0% |
| um on how you know the change in |
| consumption should |
|
|
| align:start position:0% |
| consumption should |
| |
|
|
| align:start position:0% |
| consumption should |
| be uh |
|
|
| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| responding uh basically taking |
|
|
| align:start position:0% |
| responding uh basically taking |
| |
|
|
| align:start position:0% |
| responding uh basically taking |
| advantage of of the time delays you know |
|
|
| align:start position:0% |
| advantage of of the time delays you know |
| |
|
|
| align:start position:0% |
| advantage of of the time delays you know |
| if you go back like two three periods |
|
|
| align:start position:0% |
| if you go back like two three periods |
| |
|
|
| align:start position:0% |
| if you go back like two three periods |
| there's nothing that happened that far |
|
|
| align:start position:0% |
| there's nothing that happened that far |
| |
|
|
| align:start position:0% |
| there's nothing that happened that far |
| back that's influencing anything at all |
|
|
| align:start position:0% |
| back that's influencing anything at all |
| |
|
|
| align:start position:0% |
| back that's influencing anything at all |
| today so those past data kind of become |
|
|
| align:start position:0% |
| today so those past data kind of become |
| |
|
|
| align:start position:0% |
| today so those past data kind of become |
| like predetermined variables almost as |
|
|
| align:start position:0% |
| like predetermined variables almost as |
| |
|
|
| align:start position:0% |
| like predetermined variables almost as |
| if they were instruments and so that |
|
|
| align:start position:0% |
| if they were instruments and so that |
| |
|
|
| align:start position:0% |
| if they were instruments and so that |
| kind of mysterious notation about G on E |
|
|
| align:start position:0% |
| kind of mysterious notation about G on E |
| |
|
|
| align:start position:0% |
| kind of mysterious notation about G on E |
| on on y that you know this is a version |
|
|
| align:start position:0% |
| on on y that you know this is a version |
| |
|
|
| align:start position:0% |
| on on y that you know this is a version |
| of |
|
|
| align:start position:0% |
| of |
| |
|
|
| align:start position:0% |
| of |
| it u postulating a model and then going |
|
|
| align:start position:0% |
| it u postulating a model and then going |
| |
|
|
| align:start position:0% |
| it u postulating a model and then going |
| back far enough time so you would see |
|
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| align:start position:0% |
| back far enough time so you would see |
| |
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| align:start position:0% |
| back far enough time so you would see |
| basically zero |
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| align:start position:0% |
| |
| |
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| align:start position:0% |
| |
| covariance |
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| align:start position:0% |
| |
| |
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| align:start position:0% |
| |
| so here it is actually this G is just |
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| align:start position:0% |
| so here it is actually this G is just |
| |
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| align:start position:0% |
| so here it is actually this G is just |
| basically the uh the time difference in |
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| align:start position:0% |
| basically the uh the time difference in |
| |
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| align:start position:0% |
| basically the uh the time difference in |
| income uh at t + |
|
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| align:start position:0% |
| income uh at t + |
| |
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| align:start position:0% |
| income uh at t + |
| one uh and given the other assumptions |
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| align:start position:0% |
| one uh and given the other assumptions |
| |
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| align:start position:0% |
| one uh and given the other assumptions |
| they |
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| align:start position:0% |
| they |
| |
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| align:start position:0% |
| they |
| make uh you back |
|
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| align:start position:0% |
| make uh you back |
| |
|
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| align:start position:0% |
| make uh you back |
| out the key some of the key things that |
|
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| align:start position:0% |
| out the key some of the key things that |
| |
|
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| align:start position:0% |
| out the key some of the key things that |
| you want for example how on Earth are we |
|
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| align:start position:0% |
| you want for example how on Earth are we |
| |
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| align:start position:0% |
| you want for example how on Earth are we |
| going to know about the variance of the |
|
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| align:start position:0% |
| going to know about the variance of the |
| |
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| align:start position:0% |
| going to know about the variance of the |
| transitory shocks if we never see |
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| align:start position:0% |
| transitory shocks if we never see |
| |
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| align:start position:0% |
| transitory shocks if we never see |
| transitory |
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| transitory |
| |
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| align:start position:0% |
| transitory |
| shocks well |
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| align:start position:0% |
| shocks well |
| |
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| align:start position:0% |
| shocks well |
| basically that turns out to be the |
|
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| align:start position:0% |
| basically that turns out to be the |
| |
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| align:start position:0% |
| basically that turns out to be the |
| co-variance of two things we do see the |
|
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| align:start position:0% |
| co-variance of two things we do see the |
| |
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| align:start position:0% |
| co-variance of two things we do see the |
| time difference of consumption at income |
|
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| align:start position:0% |
| time difference of consumption at income |
| |
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| align:start position:0% |
| time difference of consumption at income |
| at T and the time difference of income |
|
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| align:start position:0% |
| at T and the time difference of income |
| |
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| align:start position:0% |
| at T and the time difference of income |
| at t+ |
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| align:start position:0% |
| at t+ |
| |
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| align:start position:0% |
| at t+ |
| one hopefully you're seeing the spirit |
|
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| align:start position:0% |
| one hopefully you're seeing the spirit |
| |
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| align:start position:0% |
| one hopefully you're seeing the spirit |
| of this if not following every line of |
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| align:start position:0% |
| of this if not following every line of |
| |
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| align:start position:0% |
| of this if not following every line of |
| the algebra |
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| align:start position:0% |
| the algebra |
| |
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| align:start position:0% |
| the algebra |
| so that's where we get that |
|
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| align:start position:0% |
| so that's where we get that |
| |
|
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| align:start position:0% |
| so that's where we get that |
| object and uh and how would you get the |
|
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| align:start position:0% |
| object and uh and how would you get the |
| |
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| align:start position:0% |
| object and uh and how would you get the |
| variance of the permanent income part |
|
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| align:start position:0% |
| variance of the permanent income part |
| |
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| align:start position:0% |
| variance of the permanent income part |
| The Innovation to permanent income well |
|
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| align:start position:0% |
| The Innovation to permanent income well |
| |
|
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| align:start position:0% |
| The Innovation to permanent income well |
| remember that thing is persisting over |
|
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| align:start position:0% |
| remember that thing is persisting over |
| |
|
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| align:start position:0% |
| remember that thing is persisting over |
| time so it's a bit more |
|
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| align:start position:0% |
| time so it's a bit more |
| |
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| align:start position:0% |
| time so it's a bit more |
| complicated um it turns out to be |
|
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| align:start position:0% |
| complicated um it turns out to be |
| |
|
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| align:start position:0% |
| complicated um it turns out to be |
| this uh daunting object which is the and |
|
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| align:start position:0% |
| this uh daunting object which is the and |
| |
|
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| align:start position:0% |
| this uh daunting object which is the and |
| everything here you see that's Point |
|
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| align:start position:0% |
| everything here you see that's Point |
| |
|
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| align:start position:0% |
| everything here you see that's Point |
| number one it's the co-variance of the |
|
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| align:start position:0% |
| number one it's the co-variance of the |
| |
|
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| align:start position:0% |
| number one it's the co-variance of the |
| time difference of income at T against |
|
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| align:start position:0% |
| time difference of income at T against |
| |
|
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| align:start position:0% |
| time difference of income at T against |
| the sum of the changes in income at T |
|
|
| align:start position:0% |
| the sum of the changes in income at T |
| |
|
|
| align:start position:0% |
| the sum of the changes in income at T |
| minus one t and t + one so there again |
|
|
| align:start position:0% |
| minus one t and t + one so there again |
| |
|
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| align:start position:0% |
| minus one t and t + one so there again |
| you see this sort of time structure at |
|
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| align:start position:0% |
| you see this sort of time structure at |
| |
|
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| align:start position:0% |
| you see this sort of time structure at |
| work the spirit of it is you know go |
|
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| align:start position:0% |
| work the spirit of it is you know go |
| |
|
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| align:start position:0% |
| work the spirit of it is you know go |
| back far enough in time so everything is |
|
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| align:start position:0% |
| back far enough in time so everything is |
| |
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| align:start position:0% |
| back far enough in time so everything is |
| predetermined |
|
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| align:start position:0% |
| predetermined |
| |
|
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| align:start position:0% |
| predetermined |
| um and this is the co-variance of cons |
|
|
| align:start position:0% |
| um and this is the co-variance of cons |
| |
|
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| align:start position:0% |
| um and this is the co-variance of cons |
| consumption with that permanent shock so |
|
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| align:start position:0% |
| consumption with that permanent shock so |
| |
|
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| align:start position:0% |
| consumption with that permanent shock so |
| this this is a key object remember that |
|
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| align:start position:0% |
| this this is a key object remember that |
| |
|
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| align:start position:0% |
| this this is a key object remember that |
| insurance formula is how much is |
|
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| align:start position:0% |
| insurance formula is how much is |
| |
|
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| align:start position:0% |
| insurance formula is how much is |
| consumption moving when you with the |
|
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| align:start position:0% |
| consumption moving when you with the |
| |
|
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| align:start position:0% |
| consumption moving when you with the |
| Innovation to permanent income it all |
|
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| align:start position:0% |
| Innovation to permanent income it all |
| |
|
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| align:start position:0% |
| Innovation to permanent income it all |
| seemed quite mysterious but here is a |
|
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| align:start position:0% |
| seemed quite mysterious but here is a |
| |
|
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| align:start position:0% |
| seemed quite mysterious but here is a |
| you know an explicit formula for how |
|
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| align:start position:0% |
| you know an explicit formula for how |
| |
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| align:start position:0% |
| you know an explicit formula for how |
| they get |
|
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| align:start position:0% |
| they get |
| |
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| align:start position:0% |
| they get |
| it so clearly it's a linear |
|
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| align:start position:0% |
| it so clearly it's a linear |
| |
|
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| align:start position:0% |
| it so clearly it's a linear |
| model you know using a lot of these |
|
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| align:start position:0% |
| model you know using a lot of these |
| |
|
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| align:start position:0% |
| model you know using a lot of these |
| variance covariance formulas given the |
|
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| align:start position:0% |
| variance covariance formulas given the |
| |
|
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| align:start position:0% |
| variance covariance formulas given the |
| the assume |
|
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| align:start position:0% |
| the assume |
| |
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| align:start position:0% |
| the assume |
| structure uh they don't have to their |
|
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| align:start position:0% |
| structure uh they don't have to their |
| |
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| align:start position:0% |
| structure uh they don't have to their |
| starting point could have been something |
|
|
| align:start position:0% |
| starting point could have been something |
| |
|
|
| align:start position:0% |
| starting point could have been something |
| else uh as I said you have these ARA |
|
|
| align:start position:0% |
| else uh as I said you have these ARA |
| |
|
|
| align:start position:0% |
| else uh as I said you have these ARA |
| processes but it is some structure when |
|
|
| align:start position:0% |
| processes but it is some structure when |
| |
|
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| align:start position:0% |
| processes but it is some structure when |
| you |
|
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| align:start position:0% |
| you |
| |
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| align:start position:0% |
| you |
| specify the order of the moving average |
|
|
| align:start position:0% |
| specify the order of the moving average |
| |
|
|
| align:start position:0% |
| specify the order of the moving average |
| part and the Order of the auto |
|
|
| align:start position:0% |
| part and the Order of the auto |
| |
|
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| align:start position:0% |
| part and the Order of the auto |
| regressive part you know you get |
|
|
| align:start position:0% |
| regressive part you know you get |
| |
|
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| align:start position:0% |
| regressive part you know you get |
| restrictions on the |
|
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| align:start position:0% |
| restrictions on the |
| |
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| align:start position:0% |
| restrictions on the |
| data |
|
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| align:start position:0% |
| data |
| |
|
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| align:start position:0% |
| data |
| um |
|
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| align:start position:0% |
| um |
| |
|
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| align:start position:0% |
| um |
| so hopefully that helps resolve some of |
|
|
| align:start position:0% |
| so hopefully that helps resolve some of |
| |
|
|
| align:start position:0% |
| so hopefully that helps resolve some of |
| the mysteries about what this |
|
|
| align:start position:0% |
| the mysteries about what this |
| |
|
|
| align:start position:0% |
| the mysteries about what this |
| BPP algorithm and what they do to the |
|
|
| align:start position:0% |
| BPP algorithm and what they do to the |
| |
|
|
| align:start position:0% |
| BPP algorithm and what they do to the |
| data to measure these insurance against |
|
|
| align:start position:0% |
| data to measure these insurance against |
| |
|
|
| align:start position:0% |
| data to measure these insurance against |
| against idiosyncratic and permanent |
|
|
| align:start position:0% |
| against idiosyncratic and permanent |
| |
|
|
| align:start position:0% |
| against idiosyncratic and permanent |
| shocks okay so I'm going to leave for |
|
|
| align:start position:0% |
| shocks okay so I'm going to leave for |
| |
|
|
| align:start position:0% |
| shocks okay so I'm going to leave for |
| wit to do the |
|
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| align:start position:0% |
| wit to do the |
| |
|
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| align:start position:0% |
| wit to do the |
| uh version of |
|
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| align:start position:0% |
| uh version of |
| |
|
|
| align:start position:0% |
| uh version of |
| smoothing B in the Italian data but I I |
|
|
| align:start position:0% |
| smoothing B in the Italian data but I I |
| |
|
|
| align:start position:0% |
| smoothing B in the Italian data but I I |
| will just say by way of motivation it's |
|
|
| align:start position:0% |
| will just say by way of motivation it's |
| |
|
|
| align:start position:0% |
| will just say by way of motivation it's |
| again looking at you know various models |
|
|
| align:start position:0% |
| again looking at you know various models |
| |
|
|
| align:start position:0% |
| again looking at you know various models |
| although they're not exactly nested and |
|
|
| align:start position:0% |
| although they're not exactly nested and |
| |
|
|
| align:start position:0% |
| although they're not exactly nested and |
| looking at the response es of of |
|
|
| align:start position:0% |
| looking at the response es of of |
| |
|
|
| align:start position:0% |
| looking at the response es of of |
| consumption to |
|
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| align:start position:0% |
| consumption to |
| |
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| align:start position:0% |
| consumption to |
| Innovations but also of wealth to in |
|
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| align:start position:0% |
| Innovations but also of wealth to in |
| |
|
|
| align:start position:0% |
| Innovations but also of wealth to in |
| Innovations so we saw in my data you |
|
|
| align:start position:0% |
| Innovations so we saw in my data you |
| |
|
|
| align:start position:0% |
| Innovations so we saw in my data you |
| know sort of how wealth and various |
|
|
| align:start position:0% |
| know sort of how wealth and various |
| |
|
|
| align:start position:0% |
| know sort of how wealth and various |
| lectures is moving around in the |
|
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| align:start position:0% |
| lectures is moving around in the |
| |
|
|
| align:start position:0% |
| lectures is moving around in the |
| cross-section and moving around over |
|
|
| align:start position:0% |
| cross-section and moving around over |
| |
|
|
| align:start position:0% |
| cross-section and moving around over |
| time we talked about responses to shocks |
|
|
| align:start position:0% |
| time we talked about responses to shocks |
| |
|
|
| align:start position:0% |
| time we talked about responses to shocks |
| and you know whether they're using |
|
|
| align:start position:0% |
| and you know whether they're using |
| |
|
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| align:start position:0% |
| and you know whether they're using |
| savings accounts and so on so these guys |
|
|
| align:start position:0% |
| savings accounts and so on so these guys |
| |
|
|
| align:start position:0% |
| savings accounts and so on so these guys |
| in their own way are doing something |
|
|
| align:start position:0% |
| in their own way are doing something |
| |
|
|
| align:start position:0% |
| in their own way are doing something |
| similar and uh and the paper backs out |
|
|
| align:start position:0% |
| similar and uh and the paper backs out |
| |
|
|
| align:start position:0% |
| similar and uh and the paper backs out |
| the movements in consumption and wealth |
|
|
| align:start position:0% |
| the movements in consumption and wealth |
| |
|
|
| align:start position:0% |
| the movements in consumption and wealth |
| that are predicted from certain kinds of |
|
|
| align:start position:0% |
| that are predicted from certain kinds of |
| |
|
|
| align:start position:0% |
| that are predicted from certain kinds of |
| Innovations but not just between you |
|
|
| align:start position:0% |
| Innovations but not just between you |
| |
|
|
| align:start position:0% |
| Innovations but not just between you |
| know this year and next year but this |
|
|
| align:start position:0% |
| know this year and next year but this |
| |
|
|
| align:start position:0% |
| know this year and next year but this |
| year and two years from now all the way |
|
|
| align:start position:0% |
| year and two years from now all the way |
| |
|
|
| align:start position:0% |
| year and two years from now all the way |
| up to six years or even longer so you |
|
|
| align:start position:0% |
| up to six years or even longer so you |
| |
|
|
| align:start position:0% |
| up to six years or even longer so you |
| kind of get you know the sort of time |
|
|
| align:start position:0% |
| kind of get you know the sort of time |
| |
|
|
| align:start position:0% |
| kind of get you know the sort of time |
| profiles of |
|
|
| align:start position:0% |
| profiles of |
| |
|
|
| align:start position:0% |
| profiles of |
| responsiveness and uh you know very much |
|
|
| align:start position:0% |
| responsiveness and uh you know very much |
| |
|
|
| align:start position:0% |
| responsiveness and uh you know very much |
| in the spirit of what we're talking |
|
|
| align:start position:0% |
| in the spirit of what we're talking |
| |
|
|
| align:start position:0% |
| in the spirit of what we're talking |
| about today but yet again a bit |
|
|
| align:start position:0% |
| about today but yet again a bit |
| |
|
|
| align:start position:0% |
| about today but yet again a bit |
| different those respons patterns are |
|
|
| align:start position:0% |
| different those respons patterns are |
| |
|
|
| align:start position:0% |
| different those respons patterns are |
| very different depending on whether |
|
|
| align:start position:0% |
| very different depending on whether |
| |
|
|
| align:start position:0% |
| very different depending on whether |
| you're talking about the permanent |
|
|
| align:start position:0% |
| you're talking about the permanent |
| |
|
|
| align:start position:0% |
| you're talking about the permanent |
| income model or you know the life cycle |
|
|
| align:start position:0% |
| income model or you know the life cycle |
| |
|
|
| align:start position:0% |
| income model or you know the life cycle |
| buffer stock type |
|
|
| align:start position:0% |
| buffer stock type |
| |
|
|
| align:start position:0% |
| buffer stock type |
| model so okay that's all for |
|
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| align:start position:0% |
| |
| |
|
|
| align:start position:0% |
| |
| today |
