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This paper first documents the evolution of the cross-sectional income and consumption distribution in the US in the past 25 years. Using data from the Consumer Expenditure Survey we find that rising income inequality has not been accompanied by a corresponding rise in consumption inequality. Over the period from 1972 to 1998 the standard deviation of the(More)
Micro data show two key patterns of consumption and asset holdings over the life cycle. First, consumption expenditures on both durable and nondurable goods are hump-shaped. Second, young households keep very few liquid assets and hold most of their wealth in consumer durables. The …rst pattern persists even after controlling for family size and constitutes(More)
—This paper uses Consumer Expenditure Survey data and a seminonparametric statistical model to estimate life cycle profiles of consumption, controlling for demographics, cohort, and time effects. We construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables. Special emphasis is placed on the comparison(More)
We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is significantly positive at 36 percent. The optimal progressive labor income tax is, roughly, a flat tax of 23(More)
We investigate the welfare consequences of the stark increase in wage and earnings inequality in the US over the last 30 years. Our data stems from the Consumer Expenditure Survey, which is the only US data set that contains information on wages, hours worked, earnings and consumption for the same cross section of US households. We first document that,(More)
This paper studies the macroeconomic effects of implicit government bailout guarantees of debt obligations of Government-Sponsored Enterprises such as Fannie Mae and Freddy Mac. We construct a model with heterogenous infinitly lived households and competitive housing and mortgage markets where the government provides households with a mortgage interest rate(More)
The phylogenetic relationships among most metazoan phyla remain uncertain. We obtained large numbers of gene sequences from metazoans, including key understudied taxa. Despite the amount of data and breadth of taxa analyzed, relationships among most metazoan phyla remained unresolved. In contrast, the same genes robustly resolved phylogenetic relationships(More)
This paper provides an introduction to the special issue of the Review of Economic Dynamics on " Cross Sectional Facts for Macroeconomists ". The issue documents, for nine countries, the level and the evolution, over time and over the life cycle, of several dimensions of economic inequality, including wages, labor earnings, income, consumption, and wealth.(More)
Europeans restricted their fertility long before other parts of the world did so. By raising the marriage age of women, and ensuring that a substantial proportion remained celibate, the "European Marriage Pat-tern" (EMP) reduced childbirths by up to 40%. We analyze the rise of this first socioeconomic institution in history that limited fertility through(More)
This paper analyzes the quantitative role of idiosyncratic uncertainty in an economy in which rational agents vote on hypothetical social security reforms. We find that the role of a pay-as-you-go social security system as a partial insurance and redistribution device significantly reduces political support for a transition to an economy with a fully funded(More)