Estimating Discount Functions with Consumption Choices over the Lifecycle

  title={Estimating Discount Functions with Consumption Choices over the Lifecycle},
  author={David Laibson},
Intertemporal preferences are di¢cult to measure. We estimate time preferences using a structural bu¤er stock consumption model and the Method of Simulated Moments. The model includes stochastic labor income, liquidity constraints, child and adult dependents, liquid and illiquid assets, revolving credit, retirement, and discount functions that allow short-run and longrun discount rates to di¤er. Data on retirement wealth accumulation, credit card borrowing, and consumption-income comovement… CONTINUE READING
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