A model of expenditure shocks

• 成果类型: Article
• 署名作者: Miranda-Pinto, Jorge; Murphy, Daniel; Walsh, Kieran James; Young, Eric R.
• 署名单位: International Monetary Fund; University of Queensland; University of Virginia; Swiss Federal Institutes of Technology Domain; ETH Zurich; University of Virginia
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2025.103807
• 发表日期: 2025
• 关键词: consumption; Expenditure shocks; household debt

摘要

We introduce a new quantitative model of household expenditure shocks to rationalize the common anecdote of a low-income and low-liquidity household that uses additional income to save (repay debt) rather than consume. Our model also rationalizes key features of the joint dynamics of household-level consumption and income, including our finding that consumption is volatile yet disconnected from income, especially for households experiencing episodes of high consumption. The key feature of our model is stochastic consumption thresholds that yield large utility costs if violated. The stochastic thresholds increase the welfare cost of income fluctuations by an order of magnitude.