Consumption and Time Use Over the Life Cycle

28 Pages Posted: 30 Jul 2014

See all articles by Michael Dotsey

Michael Dotsey

Federal Reserve Bank of Philadelphia

Wenli Li

Federal Reserve Bank of Philadelphia

Fang Yang

Louisiana State University, Baton Rouge

Multiple version iconThere are 2 versions of this paper

Date Written: August 2014

Abstract

We incorporate home production in a dynamic general equilibrium model of consumption and savings with illiquid housing and a collateralized borrowing constraint. The calibrated model explains life‚Äźcycle patterns of households' time use and consumption of different categories documented from the microdata. It predicts that the interaction of the labor efficiency profile and the home production technology explains households' time use. The resulting income profiles, the endogenous borrowing constraint, and home production account for the initial hump in consumption. The complementarity of home hours, home input, and housing in home production drives the consumption profiles later in the life cycle.

Suggested Citation

Dotsey, Michael and Li, Wenli and Yang, Fang, Consumption and Time Use Over the Life Cycle (August 2014). International Economic Review, Vol. 55, Issue 3, pp. 665-692, 2014. Available at SSRN: https://ssrn.com/abstract=2473849 or http://dx.doi.org/10.1111/iere.12066

Michael Dotsey (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
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804-697-8201 (Phone)
804-697-8255 (Fax)

Wenli Li

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Fang Yang

Louisiana State University, Baton Rouge ( email )

Baton Rouge, LA 70803
United States

HOME PAGE: http://faculty.bus.lsu.edu/fyang/

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