Replication data for: Can Tax Rebates Stimulate Consumption Spending in a Life-Cycle Model?
- Huntley, Jonathan
- Michelangeli, Valentina
AbstractWe build a life-cycle model with earnings risk, liquidity constraints, and portfolio choice over tax-deferred and taxable assets to evaluate how household consumption changes in response to shocks to transitory anticipated income, such as the 2001 income tax rebate. Households optimally invest in tax-deferred assets, which are encumbered by withdrawal penalties, and exchange taxable precautionary savings for higher after-tax returns. The model predicts a higher marginal propensity to consume out of a rebate than is predicted by a standard frictionless life-cycle model. Liquidity-constrained households—with few financial assets or portfolios expensive to reallocate—consume a higher fraction of the rebates.
Is supplement to
DOI: 10.1257/mac.6.1.162 (Text)
Huntley, Jonathan, and Valentina Michelangeli. “Can Tax Rebates Stimulate Consumption Spending in a Life-Cycle Model?” American Economic Journal: Macroeconomics 6, no. 1 (January 2014): 162–89. https://doi.org/10.1257/mac.6.1.162.
- ID: 10.1257/mac.6.1.162 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-10-13