Household Consumption and Dispersed Information

• 成果类型: Article
• 署名作者: Adams, Jonathan J.; Rojas, Eugenio
• 署名单位: State University System of Florida; University of Florida; State University System of Florida; University of Florida
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2024.103592
• 发表日期: 2024
• 关键词: Heterogeneous agents; incomplete information; heterogeneous beliefs; business cycles; consumption volatility

摘要

By introducing an information friction to a heterogeneous agent model, we are able to explain two patterns of small economies experiencing large income changes: (1) excess volatility in consumption and (2) household consumption elasticities that have low correlation with income. With a standard dispersed information structure, households cannot distinguish aggregate income shocks from idiosyncratic ones. Their consumption responds excessively to aggregate shocks, which they incorrectly forecast to be too persistent. This effect occurs homogeneously across the income distribution, lowering the correlation of the consumption elasticity with income. We corroborate our central mechanism using survey data on household expectations of their future earnings.