Impartido por: Olympia Bover
Directora del Departamento de Análisis Estructural y Estudios Microeconómicos del Banco de España
Lugar: Seminario M1 de la Facultad de Economía y Empresa
Fecha: 30 de mayo de 2019
In this paper, we study the nature of household income risk and its transmission to consumption in Spain. First, we examine if predictive income distributions, estimated using data on both income realizations and subjective expectations, exhibit non-linearities. Second, we estimate the transmission of those fluctuations to consumption. We find that there is more heterogeneity in income risk than linear models would suggest: the persistence of an income shock varies with its size and the position of the household in the income distribution. The presence of such income risk in addition induces heterogeneous consumption trajectories for different households. Hence, the aggregate effects of fiscal policies may depend on the target population. In particular, we analyze the introduction of a wealth tax and find that it reduces wealth inequality less than when a linear income process is considered, because high income households have a higher incentive to save given downside risk.