Dynamic Factor Models of Consumption , Hours and Income

  title={Dynamic Factor Models of Consumption , Hours and Income},
  author={Joseph G. Altonji and Ana Paula Martins},
This paper addresses two questions in the economics of intertemporal choice. First, what are the key factors that drive fluctuations in income and what are the time paths of their effects? Second, how do consumers respond to these factors? We answer these questions by estimating dynamic factor models of consumption, hours, wages, unemployment, and income… CONTINUE READING