Questions tagged [consumption]
The consumption tag has no usage guidance.
110
questions
3
votes
1
answer
58
views
Universal Basic Income (UBI) policy proposals optimal hours worked and consumption
can someone please help me check my work for this question? I want to make sure I did it correctly.
Question:
Work:
1
vote
1
answer
70
views
Help with checking work for preferences over consumption and leisure question
I was wondering if anyone could help me check my work for the following question, and if I am wrong, help me correct my mistakes?
Question:
Work:
1
vote
0
answers
14
views
How does a strong or weak economy impact consumption for display?
By display I mean, fashions, events, ceremonies, experiences, lifestyles, things we take to be motivated by signaling and enjoying an image of status and prosperity.
Clearly, during a period of ...
- 111
0
votes
0
answers
194
views
Calculating Core PCE Services excluding shelter/housing
On FRED, I would like to calculate monthly Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index) (PCEPILFE) (SA) excluding housing, either by removing it from this ...
1
vote
2
answers
39
views
How does the Cobbs-Douglas Demand system account for diminishing marginal utility?
So the cobbs douglas demand system indicates that the consumption of the capitalist class can be modeled as C=(1+r)K where r represents net profit for that time period, K represents capital stock of ...
- 117
1
vote
0
answers
21
views
Necessity of hyperbolic absolute risk aversion for the concavity of consumption functions
I'm currently reading the paper with the same title as this question by Mr. Toda, I attached the link below.
https://www.sciencedirect.com/science/article/abs/pii/S0304406820301373
and I have several ...
user42301
1
vote
0
answers
12
views
what is the relationship between general consumption function and concave consumption function?
so i was given the general consumption function as shown bellow:
what i wanna know is what will happen to the function above if the consumption function (C_T) is concave?
user42301
1
vote
0
answers
8
views
Downloading disaggregated prices and weights for the US
For a thesis, I would have to download disaggregated price indices for the US.
I managed to download disaggregated Prices from the BEA.
However, the weights are not included.
I could also download ...
- 21
1
vote
0
answers
32
views
What is the difference between consumption smoothing and risk smoothing?
So there is a body of literature that talks about consumption smoothing (e.g. Rosenzweig & Stark 1989) and another body of literature that talks about risk smoothing in the context of insurance.
...
- 83
3
votes
0
answers
102
views
Economic interpretation of assumption on utility function
Suppose $u\colon \mathbb{R}_{>0} \to \mathbb{R}$ is a utility function, twice continously differentiable, $u' > 0, u'' < 0$, and the classic Inada conditions hold, i.e., $\lim_{c \to \infty} ...
- 73
0
votes
1
answer
30
views
Consumption CAPM and compounded risk free rate [closed]
I am studying consumption CAPM and trying to prove, assuming lognormal consumption growth one can show that the continuously compounded risk-free rate is:
0
votes
1
answer
27
views
Do consumers consume when MPC = MPB
Just need some clarification on an issue im having. Correct me if im wrong, but in the overconsumption of a demerit, consumers consume at S=D as their marginal personal benefit = to their marginal ...
3
votes
1
answer
76
views
For any small perturbation dx, utility cannot change, or else, x* would not be optimal
I am having trouble understanding something that Varian says in "Microeconomic Analysis: Third Edition." For those of you who have the book handy, the question that I have regards something ...
- 103
0
votes
1
answer
19
views
Is there a place to get raw consumer data?
I was looking at an app on Iphone which allows people to track their meals, and trying to think, how would I build variance of taste into an economics sim ? And the only thing I can think is raw ...
2
votes
0
answers
60
views
Closed form solution to consumption-saving model in discrete time
Consider the simplest consumption-savings model of the following form:
$$
\max_{\{c_t,a_{t+1}\}_t}\mathbb{E_0}\sum_{t\geq 0} \beta^tu(c_t) \\
a_{t+1} + c_t = (1+r)a_t + y_t \\
y_t \mid y_{t-1} \sim F
$...
- 59
5
votes
0
answers
80
views
Optimal level of consumption in discrete time model with quadratic preferences and infinite horizon
I am trying to derive an expression for the optimal level of consumption in the basic problem:
$ max \hspace{1cm} U_t = E_t \left[\sum_{s=t}^{\infty} \beta^{s-t} \left( C_s - a\frac{Cs}{2}^2 \right) ...
- 113
-1
votes
1
answer
53
views
Why do companies and stores never seem to take into consideration the fact that few people want ugly colours of the same product?
In 1997, I traveled far and wide to hunt down an original Tamagotchi. Whereas everyone else had one of the numerous clones, often with many more features, I had to have the real Tamagotchi. When I ...
1
vote
0
answers
23
views
Macroeconomics, price setting and wage setting [closed]
What happens to prcie setting and wage setting when consumption falls? I already looked at what happens to IS-curve and LM-curve.
0
votes
1
answer
63
views
Adding scaled CRRA utility
Suppose our utility function is the usual CRRA utility with $\gamma=2$ so that:
$$u(C) = \frac{C^{1-\gamma}}{1-\gamma} = -\frac{1}{C}$$
Now suppose there are 2 goods, A and B, available for ...
3
votes
0
answers
48
views
Some basic Consumption CAPM questions
Say we are in a world described by the consumption CAPM. All investors in this world have quadratic utility. Also, assume that consumption is as follows:
$$c_{t+1} = (1+m_t)c_t + s_t c_t e_t $$
where ...
- 349
1
vote
1
answer
142
views
IS curve, interest rate and consumption
It is possible for the interest rate to affect the expenditure with consumption. An increase in the interest rate could, in principle, lead to increases in savings and, that way, to a decrease in ...
- 390
1
vote
0
answers
210
views
What is the no ponzi condition for this representative consumer problem? Tags: Initial condition, no-ponzi game
This question is following Farhi et.al. 2014's consumer budget constraint modified to add a government bond and removing money. A simplified version is given below which is pertinent to the question.
$...
- 166
4
votes
1
answer
76
views
Is $(\mathbb{R}^m)^n$ the real coordinate space of dimension $m\cdot n$?
Very simple question here: say that there are n individuals and each individual $i\leq n$ has a consumption bundle $x_i\in \mathbb{R}^m$ (i.e. there are $m$ types of goods). Suppose that social ...
- 43
1
vote
0
answers
76
views
What's the conclusion of PIH and LCH?
Both the Life Cycle Hypothesis and Permanent Income Hypothesis concludes the same that permanent income, not the current income, is the primary determinant of consumption. If that is true, then how ...
- 11
3
votes
0
answers
103
views
How can you interpret one of the parameters of optimal consumption at the Merton portfolio problem?
Statement: Let the dynamics of wealth of the agent satisfy
$$dX_{t} =
\pi_tX_t\Big(\mu dt+\sigma dB_{t}\Big)- c_t X_t dt, \qquad \textrm{with}\quad X_0=x_0 \in \mathbb{R},$$
where $(\pi,c)$ is an ...
- 31
3
votes
3
answers
82
views
Why doesn't Nintendo fire up the old factories and re-produce *exact* copies of many of their most popular games, controllers and consoles?
Let's suppose that Nintendo announce tomorrow that they are going to create exact re-releases of the American and European NES, SNES and Nintendo 64 consoles, exactly the same as when they were ...
- 39
1
vote
0
answers
27
views
Estimating $dL/dw$ with direct dependencies using total differential
I have $U(C,L) = U(C) - v(L)$ where $C$ is consumption and $L$ is labor supply. From my first order conditions, $C$ is a function of $w$, wage, and $L$. $L$ is a function of $w$ and $C$. Leisure is $N ...
- 11
4
votes
2
answers
5k
views
Does salary contribute to GDP under the expenditure approach?
The question really confuses me. On one hand, we can consider the wages as purchasing services from employees. On the other hand, the salary is also part of the cost of the products, thus it isn't &...
- 43
22
votes
7
answers
13k
views
Why do low-income earners tend to spend more?
I am reading an article in the Economist.
It is discussing the China's unbalanced economy especially the lower household consumption proportion in GDP than the global average. The writer thinks the ...
- 321
7
votes
3
answers
574
views
What would be the economic effect of widespread instances of individuals paying off consumer debt?
In light of the economic impact of the recent shutdowns in response to COVID-19, the Australian Government is considering bringing forward planned tax cuts, that were do to be implemented gradually ...
- 173
2
votes
3
answers
193
views
Relation between demands of $x, y$ and $z$
Question: Consider a consumer with utility function $U(x,y,z)=y\min\{x,z\}$. The prices of all three goods are the same. The consumer has $100 to spend on these three goods.The demands will be such ...
- 203
1
vote
1
answer
26
views
Does anybody knows where I should look for a proxy for consumption to estimate a two factor C-CAPM?
Has anybody seen, any textbook recommendation that refers to the proper proxy for consumption. I am trying to estimate a two factor consumption CAPM, namely we I add a second factor apart from ...
- 949
1
vote
1
answer
253
views
How does the GDP multiplier work?
When we learn about the GDP multiplier, it is portrayed as 1/MPS, because savings are supposedly a leak out of consumer spending. However, what I don't understand is aren't those savings spent anyways ...
1
vote
0
answers
47
views
Why Does Deficit Spending Work Without a Liquidity Trap?
My understanding is that in a functioning economy, the financial market clears when the nominal interest rate is above zero. It is only when it reaches zero that a liquidity trap occurs and the ...
0
votes
1
answer
84
views
Why does the aggregate consumer spending decrease due to to lower expected future disposable income instead of MPC?
This illustration is from Krugman's macroeconomics textbook, it's supposed to illustrate following situation (assuming that it happened for many people):
Conversely, suppose you have a good job but ...
- 1,113
0
votes
1
answer
42
views
Does the investment component of GDP (demand side) identity include expenditures by the government and households?
In the identity GDP=C+I+G+(X-M) does "I" include expenditures by the government and households?
For example, if a construction firm builds new residential properties and a household buys this ...
- 563
1
vote
2
answers
170
views
Marginal rate of substitution notation:
I am having a dumb doubt in writing some slides for an undergraduate class.
I want to be consistent with the use in microeconomics but this easy thing is really bugging me:
Mas-colell pag. 54
$ ...
- 161
1
vote
1
answer
290
views
MPC and MPS relationship
I have a question from an old assignment that I cant wrap my head around.
...
- 13
1
vote
0
answers
91
views
On demand functions and Engel curves
A consumer has utility function $U(x,y)=(x−2)y$, where $x≥2$ and $y≥0$. The price of $x$ is $P_x$, the price of $y$ is $P_y$ and the consumer's income is $I>2P_x$. ($x$ and $y$ do not have to be ...
- 161
0
votes
1
answer
37
views
GDP(Expenditure view of GDP): /Why aren't investments categorized as non-final goods?
My understanding is that consumption = consumption of final goods = whatever consumers buy from companies (with an adjustment for export-import-process + maybe housing is slightly different (not ...
- 1
0
votes
1
answer
47
views
Is Buy Nothing Day a classist protest of Black Friday?
I hope this isn't off topic, it seems specifically economic to me even though it probably intersects with other fields of study.
Black Friday is seen as an iconic hallmark of consumerism, and Buy ...
- 155
1
vote
0
answers
88
views
What is Economic Interpretation of three nonlinear equations?
I have the following nonlinear system
$w$ is wealth
$c$ is consumption
$r(w)$ is gross return on wealth
$a,b, d$ are parameters which are strictly positive and fixed.
$$\dot{w} =r(w)w-c$$
$$\...
- 96
1
vote
1
answer
819
views
Why salaries counted under Government expenditure in GDP
In the expenditure approach of GDP calculation, why are government employee's salary counted under Government approach while for private firms, we don't count salaries. I am unable to understand if ...
- 153
0
votes
0
answers
206
views
How to prove that the walrasian demand function $x(p,w)$ is continuous in $p$ and $w$?
If the utility function $u$ is continuous and satisfies local nonsatiation, and walrasian demand function $x(p, w)$ is a function (i.e. always map to only single values), how to prove that $x(p,w)$ is ...
- 382
2
votes
1
answer
243
views
Why does strictly Walrasian demand with quasi-concave utility function mean that the walrasian demand having only one single consumption bundle?
In the context of Walrasian demand:
Suppose u is continuous, satisfies local nonsatiation, and is strictly quasi-concave, each $w(p, x)$ contains a single consumption bundle.
The proof I got from a ...
- 382
0
votes
0
answers
341
views
Interpretation of coefficients in ECM for consumption
Say that we are regressing consumption $C_t$ on time $Y_t$. Furthermore, suppose that both series are $I(1)$ and are co-integrated.
Given this, we set up the error correction model (ECM) as follows: $...
- 101
0
votes
0
answers
27
views
Numerical Solution Using Excel about optimal consumption of households
I'm not sure how to solve this problem. I'm given the discount factor, interest rate, probability of high income shock, and various income shock sizes that I need to use to compute optimal consumption....
0
votes
1
answer
622
views
Good source for marginal propensity to consume by country?
Is there a good data source that aggregates the MPCs of various countries?
Thanks.
- 1
1
vote
1
answer
183
views
Does higher tax on luxury goods does more harm than benefit?
I was studying Fiscal policy and I came across measures to reduce income inequality by using fiscal tools. One of the tool mentioned in that was - Higher taxes on luxury goods
This makes sense that ...
- 111
1
vote
0
answers
19
views
Relationship b/w consumption & increase in interest rate
Please help me clarify this-
Case 1 - If interest rates increase then people will save more to reap the benefits and will cut down on their consumption(C) so Consumption will fall.
Case 2 - Due to ...
- 111