Zoomers and Boomers: Asset Prices and Intergenerational Inequality
We construct a perpetual youth DSGE model with aggregate uncertainty in which there are dynamically complete markets and agents have Epstein-Zin preferences. We prove that, when endowments have a realistic hump-shaped age-profile, our model has three steady-state equilibria. One of these equilibria...
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| creator | Farmer, Roger Farmer, Leland E |
| description | We construct a perpetual youth DSGE model with aggregate uncertainty in which there are dynamically complete markets and agents have Epstein-Zin preferences. We prove that, when endowments have a realistic hump-shaped age-profile, our model has three steady-state equilibria. One of these equilibria is dynamically inefficient and displays real price indeterminacy. We estimate the parameters of our model and we find that a fourth-order approximation around the indeterminate steady-state provides the best fit to U.S. data. Our work interprets the large and persistent generational inequality that has been observed in western economies over the past century as the result of uninsurable income shocks to birth cohorts. |
| doi_str_mv | 10.3386/w30419 |
| format | Article |
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We prove that, when endowments have a realistic hump-shaped age-profile, our model has three steady-state equilibria. One of these equilibria is dynamically inefficient and displays real price indeterminacy. We estimate the parameters of our model and we find that a fourth-order approximation around the indeterminate steady-state provides the best fit to U.S. data. Our work interprets the large and persistent generational inequality that has been observed in western economies over the past century as the result of uninsurable income shocks to birth cohorts.</description><identifier>ISSN: 0898-2937</identifier><identifier>DOI: 10.3386/w30419</identifier><language>eng</language><publisher>Cambridge: National Bureau of Economic Research</publisher><subject>Approximation ; Asset Pricing ; Economic theory ; Economics ; Elasticity ; Equilibrium ; Expenditures ; Fiscal policy ; Inequality ; Interest rates ; International Finance and Macroeconomics ; Monetary Economics ; Prices ; Wealth distribution</subject><ispartof>NBER Working Paper Series, 2022-09</ispartof><rights>Copyright National Bureau of Economic Research, Inc. 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We estimate the parameters of our model and we find that a fourth-order approximation around the indeterminate steady-state provides the best fit to U.S. data. Our work interprets the large and persistent generational inequality that has been observed in western economies over the past century as the result of uninsurable income shocks to birth cohorts.</description><subject>Approximation</subject><subject>Asset Pricing</subject><subject>Economic theory</subject><subject>Economics</subject><subject>Elasticity</subject><subject>Equilibrium</subject><subject>Expenditures</subject><subject>Fiscal policy</subject><subject>Inequality</subject><subject>Interest rates</subject><subject>International Finance and Macroeconomics</subject><subject>Monetary Economics</subject><subject>Prices</subject><subject>Wealth distribution</subject><issn>0898-2937</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2022</creationdate><recordtype>article</recordtype><sourceid>NBR</sourceid><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><recordid>eNotULFOwzAU9AASpcAHMEViDjjPybPN1lYUKlWCoRNLZLvPKFXqtHYi1L8nUpjudHc6nY6xh4I_C6Hw5VfwstBXbMaVVjloIW_YbUoHzkEpXszY8rvrjhRTZsI-W078NVukRH32FRtHk7MJPcUfChRN33TBtKNC58G0TX-5Y9fetInu_3HOduu33eoj336-b1aLbR5KqfPKOA1AFj04AMF5ZUFp69GjNkKDdQhKOjRGcO8UovWgSqfRV8LspRRz9jTVnmJ3Hij19aEb4jgl1SALUMgB9Zh6nFLBUqxPsTmaeKmnG8QfFZ9QuQ</recordid><startdate>20220901</startdate><enddate>20220901</enddate><creator>Farmer, Roger</creator><creator>Farmer, Leland E</creator><general>National Bureau of Economic Research</general><general>National Bureau of Economic Research, Inc</general><scope>CZO</scope><scope>MPB</scope><scope>NBR</scope><scope>XD6</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>F~G</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>M0C</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>20220901</creationdate><title>Zoomers and Boomers: Asset Prices and Intergenerational Inequality</title><author>Farmer, Roger ; 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| issn | 0898-2937 |
| language | eng |
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| source | National Bureau of Economic Research Publications; Alma/SFX Local Collection |
| subjects | Approximation Asset Pricing Economic theory Economics Elasticity Equilibrium Expenditures Fiscal policy Inequality Interest rates International Finance and Macroeconomics Monetary Economics Prices Wealth distribution |
| title | Zoomers and Boomers: Asset Prices and Intergenerational Inequality |
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