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Working Paper 2003-017F

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"A Leisurely Reading of the Life Cycle Consumption Data"
by James B. Bullard, and James Feigenbaum

A puzzle in consumption theory is the observation of a hump in age-consumption profiles. This paper studies a general equilibrium life-cycle economy with capital in which households include both consumption and leisure in their period utility function. A calibrated version of the model shows that a significant hump in life-cycle consumption is a feature of the equilibrium. Thus inclusion of leisure in household preferences may provide part of the explanation of observed lifecycle consumption humps.

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Category > Monetary Policy/Macroeconomics
Author > James B. Bullard