Survey data on household finance and consumption - research summary and policy use

The first part of this paper provides a brief survey of the recent literature that employs survey data on household finance and consumption. Given the breadth of the topic, it focuses on issues that are particularly relevant for policy, namely i) wealth effects on consumption, ii) housing prices and household indebtedness, iii) retirement income, consumption and pension reforms, iv) access to credit and credit constraints, v) financial innovation, consumption smoothing and portfolio selection and vi) wealth inequality. The second part uses concrete examples to summarise how results from such surveys feed into policy-making within the central banks that already conduct such surveys. JEL Classification: C42, D12, D14.Household finance, consumption, survey data.

Consumption

Macroeconomic research on consumption has been influenced profoundly by rational expectations. First, rational expectations together with the hypothesis of constant expected real interest rates implies that consumption should evolve as a random walk. Much of the research of the past decade has been devoted to testing the random walk hypothesis and to explaining its failure. Three branches of the literature have developed. The first relies on the durability of consumption to explain deviations from the random walk property. The second invokes liquidity constraints which block consumers from the credit market transactions needed to make consumption follow a random walk when income fluctuates up and down. The third branch dispenses with the assumption that expected real interest rates are constant. It attempts to explain deviations from the random walk in terms of intertemporal substitution.

Coal Consumption Sources

La región Caribe tiene un rezago importante con respecto al resto del país en términos de cobertura y calidad de la educación. Este artículo tiene como objetivo proponer una serie de políticas que permitan dar un gran impulso al sistema de educación escolar de la región y cerrar las principales brechas entre los años 2019 y 2030. Se proponen cuatro grandes ejes de intervención: educación preescolar, jornada única, docentes y fortalecimiento institucional. La inversión necesaria para realizar los programas de esta propuesta se estima en 2.108 millones de dólares. Adicionalmente, se requiere de 4.160 millones de dólares para financiar el aumento en los costos recurrentes del sector educativo de la región en el período citado

Advertising and Conspicuous Consumption

The paper formalizes the intuition that brands are consumed for image reasons and that advertising creates a brand’s image. The key idea is that advertising informs the public of brand names and creates the possibility of conspicuous consumption by rendering brands a signalling device. In a price competition framework, we show that advertising increases consumers’ willingness to pay and thus provide a foundation, based on optimization behavior, for persuasive approaches to advertising. Moreover, an incumbent might strategically overinvest in advertising to deter entry, there might be too much advertising, and competition might be socially undesirable

Considering a Consumption Tax

A combination of electronic commerce and the Flat Tax could eliminate the IRS as we know it