File Download

There are no files associated with this item.

  Links for fulltext
     (May Require Subscription)
Supplementary

Article: Rational Inattention and the Dynamics of Consumption and Wealth in General Equilibrium

TitleRational Inattention and the Dynamics of Consumption and Wealth in General Equilibrium
Authors
Issue Date2017
PublisherAcademic Press. The Journal's web site is located at http://www.elsevier.com/locate/jet
Citation
Journal of Economic Theory, 2017, v. 172, p. 55-87 How to Cite?
AbstractWe propose a recursive utility version of a basic Huggett (1993) model to study the implications of rational inattention (or RI, Sims 2003, 2010) for the cross-sectional dispersion of consumption and wealth (relative to income) in general equilibrium. We find that incorporating RI can significantly improve the model's predictions on both facts in general equilibrium. In addition, we find that intertemporal substitution plays an important role in determining the two key dispersion moments via affecting the degree of optimal attention in equilibrium. Finally, we show that alternative models that rely on habit formation, incomplete information about current income, or borrowing constraints are not consistent with the facts we document.
Persistent Identifierhttp://hdl.handle.net/10722/245363
ISSN
2017 Impact Factor: 1.204
2015 SCImago Journal Rankings: 2.587
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorLuo, Y-
dc.contributor.authorNie, J-
dc.contributor.authorWang, G-
dc.contributor.authorYoung, E-
dc.date.accessioned2017-09-18T02:09:18Z-
dc.date.available2017-09-18T02:09:18Z-
dc.date.issued2017-
dc.identifier.citationJournal of Economic Theory, 2017, v. 172, p. 55-87-
dc.identifier.issn0022-0531-
dc.identifier.urihttp://hdl.handle.net/10722/245363-
dc.description.abstractWe propose a recursive utility version of a basic Huggett (1993) model to study the implications of rational inattention (or RI, Sims 2003, 2010) for the cross-sectional dispersion of consumption and wealth (relative to income) in general equilibrium. We find that incorporating RI can significantly improve the model's predictions on both facts in general equilibrium. In addition, we find that intertemporal substitution plays an important role in determining the two key dispersion moments via affecting the degree of optimal attention in equilibrium. Finally, we show that alternative models that rely on habit formation, incomplete information about current income, or borrowing constraints are not consistent with the facts we document.-
dc.languageeng-
dc.publisherAcademic Press. The Journal's web site is located at http://www.elsevier.com/locate/jet-
dc.relation.ispartofJournal of Economic Theory-
dc.rightsPosting accepted manuscript (postprint): © <year>. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/-
dc.titleRational Inattention and the Dynamics of Consumption and Wealth in General Equilibrium-
dc.typeArticle-
dc.identifier.emailLuo, Y: yluo@econ.hku.hk-
dc.identifier.authorityLuo, Y=rp01083-
dc.identifier.doi10.1016/j.jet.2017.08.005-
dc.identifier.hkuros275940-
dc.identifier.volume172-
dc.identifier.spage55-
dc.identifier.epage87-
dc.identifier.isiWOS:000416194500003-
dc.publisher.placeUnited States-

Export via OAI-PMH Interface in XML Formats


OR


Export to Other Non-XML Formats