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Families As Shocks

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Listed:
  • Luis Cubeddu

    (International Monetary Fund,)

  • José-Víctor Ríos-Rull

    (University of Pennsylvania, CAERP, NBER, and CEPR)

Abstract

In this paper we show the quantitative importance of the process that determines changes in family composition to determine the main macroeconomic magnitudes. We do so by modelling family type as a stochastic process that affects households in a way similar to shocks to earnings. Agents respond to these process by optimally choosing savings. We show that the size of savings differs dramatically depending on the details of the stochastic process. The model is quantitative: its fundamental parameters are estimated using U.S. data. Copyright (c) 2003 The European Economic Association.

Suggested Citation

  • Luis Cubeddu & José-Víctor Ríos-Rull, 2003. "Families As Shocks," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 671-682, 04/05.
    • Handle: RePEc:tpr:jeurec:v:1:y:2003:i:2-3:p:671-682
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    References listed on IDEAS

    as
    1. S. Rao Aiyagari, 1994. "Uninsured Idiosyncratic Risk and Aggregate Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(3), pages 659-684.
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    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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