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Is the basic life-cycle theory of consumption becoming more relevant? Evidence from Portugal

Author

Listed:
  • Fernando Alexandre

    (NIPE/Universidade do Minho, Escola de Economia e Gestão, Campus de Gualtar)

  • Pedro Bação

    (CeBER/GEMF/Universidade de Coimbra, Faculdade de Economia da Universidade de Coimbra)

  • Miguel Portela

    (NIPE/Universidade do Minho and IZA Bonn, Universidade do Minho, Escola de Economia e Gestão, Campus de Gualtar)

Abstract

In this paper we report and discuss estimates of life-cycle consumption profiles obtained using microdata for Portuguese households. The estimated profiles are much flatter than the profiles usually reported in the literature for other countries, namely the Netherlands, the UK and the USA. In addition, we also report estimates of cohort and business cycle effects on consumption. The estimated cohort effects are consistent with the post-war progress in median standards of living. However, there is a deceleration in the trend of consumption growth for more recent cohorts. The business cycle estimates suggest that the recent debt crisis has had a strong negative impact on household consumption.

Suggested Citation

  • Fernando Alexandre & Pedro Bação & Miguel Portela, 2020. "Is the basic life-cycle theory of consumption becoming more relevant? Evidence from Portugal," Review of Economics of the Household, Springer, vol. 18(1), pages 93-116, March.
    • Handle: RePEc:kap:reveho:v:18:y:2020:i:1:d:10.1007_s11150-019-09471-0
    DOI: 10.1007/s11150-019-09471-0
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    More about this item

    Keywords

    Cohorts; Consumption; Life-cyle; Microdata;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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