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Others: Income Risks and Optimal Attention-Consumption Allocation

TitleIncome Risks and Optimal Attention-Consumption Allocation
Authors
KeywordsCapital Income and Labor income Risks
Optimal Attention Allocation
Consumption and Saving Decisions
Issue Date2020
Citation
Luo, Yulei and Yin, Penghui, Income Risks and Optimal Attention-Consumption Allocation (June 2, 2020). Available at SSRN: https://ssrn.com/abstract=3616745 How to Cite?
AbstractThis paper studies how agents allocate their limited attention between capital income and labor income risks in a two-period consumption-saving model with recursive utility. Specifically, we examine how the optimal attention and consumption-saving decisions are affected by the key model elements including the attention and wealth endowments, the risk and time preferences, and the amount of income risks. We also find that the simple model can have the potential to explain the consumption responses to the income risks and the relative volatility of consumption to income observed in the U.S. economy. Finally, we find that the welfare losses due to limited attention are insignificant.
DescriptionWorking Paper
Persistent Identifierhttp://hdl.handle.net/10722/286028
SSRN

 

DC FieldValueLanguage
dc.contributor.authorLuo, Y-
dc.contributor.authorYin, P-
dc.date.accessioned2020-08-27T07:57:27Z-
dc.date.available2020-08-27T07:57:27Z-
dc.date.issued2020-
dc.identifier.citationLuo, Yulei and Yin, Penghui, Income Risks and Optimal Attention-Consumption Allocation (June 2, 2020). Available at SSRN: https://ssrn.com/abstract=3616745-
dc.identifier.urihttp://hdl.handle.net/10722/286028-
dc.descriptionWorking Paper-
dc.description.abstractThis paper studies how agents allocate their limited attention between capital income and labor income risks in a two-period consumption-saving model with recursive utility. Specifically, we examine how the optimal attention and consumption-saving decisions are affected by the key model elements including the attention and wealth endowments, the risk and time preferences, and the amount of income risks. We also find that the simple model can have the potential to explain the consumption responses to the income risks and the relative volatility of consumption to income observed in the U.S. economy. Finally, we find that the welfare losses due to limited attention are insignificant.-
dc.languageeng-
dc.subjectCapital Income and Labor income Risks-
dc.subjectOptimal Attention Allocation-
dc.subjectConsumption and Saving Decisions-
dc.titleIncome Risks and Optimal Attention-Consumption Allocation-
dc.typeOthers-
dc.identifier.emailLuo, Y: yluo@econ.hku.hk-
dc.identifier.authorityLuo, Y=rp01083-
dc.description.naturepublished_or_final_version-
dc.identifier.doi10.2139/ssrn.3616745-
dc.identifier.hkuros700003868-
dc.identifier.ssrn3616745-
dc.identifier.hkulrp2020/040-

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