The paper studies Germany's temporary 3 percentage-point VAT cut from July 1 to December 31, 2020 (standard rate 19%→16%, reduced rate 7%→5%), combining two causal identification strategies with …
A one-parameter-family utility function nests time-separable preferences, "catching up with the Joneses" (utility depends on own consumption relative to lagged aggregate consumption per capita) and …
PublishedJournal of Monetary EconomicsPublished Jul 2025
Households are exposed to different rates of inflation because they buy different things, and using anonymised quarterly bank-account records for 89,507 individuals at one of Estonia's leading …
PublishedClassicJournal of International EconomicsPublished Nov 1993
Nontraded goods had been invoked to explain several international puzzles at once -- persistent deviations from purchasing power parity, low cross-country consumption correlations, and real interest …
If households form habits over individual goods rather than over a consumption aggregate, the demand a firm faces depends on its own past sales, its pricing problem becomes dynamic, and mark-ups turn …
Standard optimising consumption models make spending jump on impact when a shock hits, which the data flatly contradict; replacing time-separable utility with habit formation gives consumers a motive …
By building three nested HANK economies and then constructing a deliberately simple two-agent counterpart for each, this paper argues that what household heterogeneity does to aggregate output can be …
Adding habit formation in consumption to an optimising sticky-price model changes both the IS curve and the Phillips curve, makes the variance of output itself -- not only the output gap -- …
In a calibrated stochastic growth model where a continuum of households face partially uninsurable employment risk and can self-insure only by holding aggregate capital, the macroeconomic aggregates …
Letting a fraction of consumers and price setters replace optimisation with a backward-looking rule of thumb adds endogenous persistence to output and inflation, changes how shocks travel through a …
This paper shows that if consumers maximize expected lifetime utility subject to an intertemporal budget constraint under uncertain future earnings -- the standard life cycle-permanent income model -- …
Online FirstJournal of Political EconomyOnline 31 Aug 2026
Two of the most influential results in optimal tax theory — Saez's (2001) formula for the top income tax rate and Atkinson and Stiglitz's (1976) case for not taxing savings — are usually invoked …