Objective
Research objectives and content
Research aimed at understanding the consumption and savings decisions of households and their implications for aggregate cyclical fluctuations as well as aggregate long-run growth has been a cornerstone of theoretical and empirical economic investigations for many decades. There are few, if any, economic issues that have more tar reaching consequences than how households provide for their futures through savings, savings that in turn help finance the accumulation of capital by firms, and thus are critical for countries welfare levels in the long run. In the words of the Nobel laureate Robert Lucas, once one starts to think out (these issues), it is hard to think out anything else. In the proposed research project, my goal is to provide (in collaboration with M. Hashem Pesaran) new quantitative answers and fresh insights into some important yet unresolved issues in this area. Recent theoretical research on consumption has made it clear that a potentially major determinant of the time paths of consumption is how intertemporally optimising households insure themselves against future contingencies through precautionary savings. There has been little work on assessing this hypothesis using formal econometric techniques, however. The few existing studies using formal econometric techniques are not tightly integrated with the theory of households' optimal consumption decisions under precautionary savings. In the proposed research project, we intend to fill this gap.
This will allow us to provide empirically sound quantitative answers to the following types of questions:
- What are the effects of changes in labour income uncertainty on households' consumption and savings decisions? Are these effects sizeable enough to affect long-run economic performance?
- To what extent do price level expectations affect households' consumption and savings decisions?
- What is the impact on the time paths of consumption and savings of fiscal policies that smooth households' labour income fluctuations (but that may not affect their expected total lifetime resources)? Quantitative answers to these questions will substantially further our understanding of questions that have been at the core of recent macroeconomic research, and will undoubtedly stimulate further macroeconometric work in this area using the novel techniques to be developed and used in this project.
Training content (objective, benefit and expected impact)
The proposed research project will enable me to learn further out the econometrics of dynamic heterogeneous panels from M. Hashem Pesaran and his collaborators. As my research so far has addressed the macroeconomics of decision making under uncertainty and information heterogeneity mainly from a quantitative theory perspective, this would have an enormously positive impact on the empirical content and rigor of my future research projects going far beyond the important insights into consumption to be gained from the proposed research project.
Links with industry / industrial relevance (22)
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
- social sciences economics and business economics econometrics
- social sciences economics and business economics macroeconomics
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Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
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Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Coordinator
CB3 9DE Cambridge
United Kingdom
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.