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e61 Lounge Session with James Graham (University of Sydney) Re: Consumption Behavior Across the Distribution of Liquid Assets
28 February @ 12:00 pm - 1:00 pm AEDTFree
Time & Location
Wednesday 28th February 2024, 12:00 pm – 1:00 pm
e61 Institute, Level 3/17-21 Bellevue Street Surry Hills NSW 2010, Australia | In-Person Event Only
About the event
James Graham will be presenting on: Consumption Behavior Across the Distribution of Liquid Assets
We study consumption responses to predictable income using transaction-level data from a U.S. financial institution. We find that consumption re-sponses are front-loaded to income receipt, decline moderately with liquidity, but are significant even for households with substantial liquid assets. To rationalize these facts, we develop a model of mental accounts in which consumption choices are partitioned across current income and current assets. Our calibration suggests households are moderately averse to dissaving out of assets, which generates the timing and distribution of consumption responses observed in the data. Finally, we explore implications of the model for the design of fiscal policy.