Arbeitspapier
Sticky expectations and consumption dynamics
Macroeconomic models often invoke consumption "habits" to explain the substantial persistence of macroeconomic consumption growth. But a large literature has found no evidence of habits in the microeconomic datasets that measure the behavior of individual households. We show that the apparent conflict can be explained by a model in which consumers have accurate knowledge of their personal circumstances but "sticky expectations" about the macroeconomy. In our model, the persistence of aggregate consumption growth reflects consumers' imperfect attention to aggregate shocks. Our proposed degree of (macro) inattention has negligible utility costs, because aggregate shocks constitute only a tiny proportion of the uncertainty that consumers face.
- ISBN
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978-92-899-3257-8
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 2152
- Classification
-
Wirtschaft
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Expectations; Speculations
Macroeconomics: Consumption; Saving; Wealth
Business Fluctuations; Cycles
- Subject
-
Consumption
Sticky Expectations
Habits
Inattention
Imperfect Information
- Event
-
Geistige Schöpfung
- (who)
-
Carroll, Christopher D.
Crawley, Edmund
Slacalek, Jiri
Tokuoka, Kiichi
White, Matthew N.
- Event
-
Veröffentlichung
- (who)
-
European Central Bank (ECB)
- (where)
-
Frankfurt a. M.
- (when)
-
2018
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Carroll, Christopher D.
- Crawley, Edmund
- Slacalek, Jiri
- Tokuoka, Kiichi
- White, Matthew N.
- European Central Bank (ECB)
Time of origin
- 2018
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