Questions tagged [consumption]
The consumption tag has no usage guidance.
116
questions
0
votes
1
answer
27
views
For my bachelors, would it make sense to use C+G (as Consumption + Government Expenditure) as an indicator for the prosperity of the economy?
Because G is also really just consumed by the people, wouldn´t it make sense to measure all the things that people consume to measure the prosperity of an economy?
At the end of the day, people in an ...
0
votes
1
answer
44
views
Interest rates vs consumption tax brackets
I know only a little bit about economics, but I have been puzzled why interest rates should be used to combat inflation where direct solutions exist.
I have some trouble understanding why interest ...
- 103
3
votes
1
answer
134
views
Intertemporal Utility Optimization For Multiple Goods
I'm building an economic simulation game and I'm trying to solve for the values that a person will spend on each good and the amount they will save in the current period, taking into account all ...
- 33
2
votes
0
answers
71
views
Convex Combination of pairs of points
Is it appropriate/meaningful to write vector/points $(a,b) \le (c,d)$, where i would mean component wise each component is $\le$
Specifically is my example below with reference to concavity ...
- 897
1
vote
1
answer
106
views
What is the household i’s intertemporal budget constraint (utility depends on household consumption and neighbourhood's average consumption)?
Assume that household i derives utility from consumption, but now lifetime utility is given by the following expression:
$$ U_i = \sum_{t=0}^{\infty} e^{ -\rho t}\frac{1}{1-\theta} \left(\frac{C_{i,t}}...
- 33
0
votes
1
answer
53
views
How does a lack of incentive to purchase new stuff affect economics?
How does a lack of incentive to purchase new stuff affect economics?
I've perceived as if a lot of economics is rooted in the idea of continued innovation and consumption, but then I've realized that ...
- 305
1
vote
1
answer
54
views
Lagrangian for the utility-mazimization of a household in a Menu Cost model, first order condition to Ci?
I need to solve the partial derivative to C_i of the integral provided below. I'd be more than happy for some help.
Based on the book's answer, we get:
Can someone explain how do we get there? And ...
- 33
3
votes
1
answer
65
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
77
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
1
answer
30
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
597
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
41
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
23
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
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
35
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
139
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
32
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
33
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
80
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
26
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
81
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
95
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) ...
- 123
-1
votes
1
answer
54
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
24
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
90
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
52
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
193
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 ...
- 400
1
vote
0
answers
249
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
81
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
82
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
106
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
88
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
7k
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
14k
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
577
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
1
vote
3
answers
240
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 ...
- 193
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 ...
- 959
1
vote
1
answer
321
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
48
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
113
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 ...
- 1,143
0
votes
1
answer
44
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 ...
- 573
1
vote
2
answers
200
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
$ ...
- 171
1
vote
1
answer
319
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
94
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
44
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
50
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
89
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.
$$\dot{w} =r(w)w-c$$
$$\...
- 120
1
vote
1
answer
984
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 ...
- 163
0
votes
0
answers
287
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