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We study how consumer spending responds to digital payments, using the differential switch to digital payments across consumers induced by the sudden 2016 Indian Demonetization for identification. Digital payment use rose by 2.94 percentage points and monthly spending increased by 2.38% for an additional 10 percentage points in prior cash dependence. Spending remained elevated even when cash availability recovered. Robustness analyses show that the spending response is not driven by purchase substitution, income shocks, credit supply, or price changes. We provide causal evidence that digital payments increase consumer spending due to subdued endowment effects. [ABSTRACT FROM AUTHOR]

Does mental accounting matter for total consumption expenditures? We exploit a unique setting in which individuals exogenously receive a new payment card, without requesting one. Using random variation in the time of receipt, we show that individuals temporarily increase total consumption expenditure by making purchases with the new card without reducing spending on the others. We do not observe a corresponding increase in indebtedness. Total consumption expenditure rises even for the least liquidity-constrained individuals. The evidence is consistent with consumers treating methods of payment as nonfungible budget categories, as suggested by models of mental accounting and narrow bracketing. [ABSTRACT FROM AUTHOR]

We document significant negative effects of exposure to increased automation at work on household wealth accumulation. Beyond the income and savings channels, we uncover a novel mechanism contributing to the negative wealth effects of automation that arises through the endogenous optimal portfolio decisions of households. We show that households rebalance their financial wealth away from the stock market in response to increased human capital risk induced by pervasive automation, thereby attaining lower wealth levels and relative positions in the wealth distribution. Our evidence suggests that the portfolio channel amplifies the inequality-enhancing effects of increased automation. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

Using account-level credit card data from a large Turkish bank, we study the impact of a unique credit card policy that increases minimum payment on consumption and debt repayment. We show that the policy reduces credit card spending and debt, boosts existing debt repayment, and reduces credit card delinquency. The credit card debt of affected consumers falls on average by 50 |$\%$| two years into the policy's implementation. An increase in minimum payment has a stronger effect than does a decrease of a similar magnitude. We build a benchmark life cycle model with soft liquidity constraint to explain the reduction in credit card spending. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

According to classical political economists, there was a correspondence between the type of income received and social class location. Labourers received wages, while capitalists and rentiers received profits and rents. As a result, the standard measures of functional income distribution would reflect the distribution of income between classes. However, this straightforward distinction is more complicated today than it was 200 years ago. This paper proposes a new classification of labourers and capitalists that, while retaining some of the original insights of classical political economists, considers three important features of contemporary capitalism: the fact that individuals and households can earn multiple sources of income, the role of managers, and that of wealth. We apply this approach in studying the distribution of income and wealth in Italy over the period 1991–2016. We find that the labour class is growing considerably in size, while suffering an absolute and relative loss of income. Despite some labourers move towards the top of income distribution, most of the increasing representation of wage income at the top of the distribution is due to managers. [ABSTRACT FROM AUTHOR]

The automotive industry is widely considered to be crucial for the economy, as it reflects economic development in general. Despite interest in financial performance, few studies have considered paying attention to the ownership structure among stockholders. Hence, the study aims to find out how the degree of ownership concentration, measured through the independence indicator of the Bureau van Dijk, is reflected in the financial management of companies in the automotive industry among selected European countries. The generalized method of moments (GMM) technique is widely used while investigating panel data with a short estimating period, i.e. nine years annually in this case. However, this study reveals that, without deploying techniques, subsequently introduced a modified version of GMM estimators with panel data by providing an implementation using Stata statistical software. Otherwise, these particular econometric tools to analyze a dynamic panel can often give false significant estimates. Overall, liquidity seems to be significant in the case of firms with less concentrated ownership, whereas companies with a major owner are affected more by selected macroeconomic variables.

I analyze the inter vivo transfers and bequest decisions of 700,000 individuals during a period when the decision maker receives negative news regarding their life expectancy. The event that initiates the news is a health outcome. Expected mortality increases both the likelihood of transferring wealth to the next generation and the amount transferred. The size of the inter vivo transfer and bequest are positively related to the wealth of the parent and the severity of the diagnosis, regardless of diagnosis-specific demand for informal care. Using a structural life cycle model, I estimate the bequest parameters that are consistent with the causal effect estimates. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

This paper documents an unprecedented decrease in young homeownership since the Great Recession driven by regions with high house prices. Using a panel of U.S. metro areas, I calibrate an equilibrium spatial macro-finance model with overlapping generations of mobile households. The dynamics of regional housing markets is explained by an aggregate credit contraction with heterogeneous local impacts rather than by local shocks. Lower millennial income and wealth amplify its effect. The impact of subsidies to first-time buyers is dampened, because they fail to stimulate regions that suffer from larger busts. Place-based subsidies achieve larger gains. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

Significance. The development of women’s entrepreneurship is still a largely untapped potential for growth and prosperity. The economic role of women is crucial for growth and a more equitable distribution of wealth. Economic opportunities are much more important for women today than for the previous generation, especially for developing countries. In this regard, the impact of women’s entrepreneurship on economic growth is an important area of research reflecting broader interests in gender equality, economic development and human resource optimization. Objectives. Analysis of the impact of women’s entrepreneurship on the economies of developed and developing countries and the development of some recommendations for the development of women’s entrepreneurship. Methods. For this study, the method of ordinary least squares (OLS) was used, which analyses the impact of women’s entrepreneurship on economic growth in developed and developing countries in the period 2012-2022. Results. The under-development of women’s entrepreneurship represents untapped potential for growth and prosperity in many countries. In this regard, there is an urgent need to create more favourable conditions for the development and strengthening of women’s entrepreneurship, more thoughtful policies and decisive measures aimed at empowering women are crucial. The results obtained in the course of this study are important for the development of theoretical and methodological foundations for the study of women’s entrepreneurship. The results of the study may be useful for women entrepreneurs, NGOs/NGOs, development institutions and government agencies.

Purpose: Throughout the 21st century, US households have experienced unprecedented levels of leverage. This dynamic has been exacerbated by income shortfalls during the COVID-19 crisis. Leveraging and deleveraging decisions affect household consumption. This study investigates the effect of the dynamics of household leverage and consumption on the stock market. Design/methodology/approach: The authors explore the relation between household leverage and consumption in the context of the consumption capital asset pricing model (CCAPM). The authors test the model's implication that leverage has a negative risk premium by transforming the asset pricing restriction into an unconditional linear factor model and estimate the model using the general method of moments procedure. The authors run time-series regressions to estimate individual stocks' exposures to leverage, and cross-sectional regressions to investigate the leverage risk premium. Findings: The authors show that shocks to household debt have strong and lasting effects on consumption growth. The authors extend the CCAPM to accommodate this effect and find, using various test assets, a negative risk premium associated with household deleveraging. Looking at individual stocks the authors show that the deleveraging risk premium is not explained by well-known risk factors. Originality/value: This paper contributes to the literature on the role of leverage in economics and finance by establishing a relation between household leverage and spending decisions. The authors provide novel evidence that households' leveraging and deleveraging decisions can be a fundamental and influential force in determining asset prices. Further, this paper argues that household leverage might explain the small, persistent, and predictable component in consumption growth hypothesised in the long-run risk asset pricing literature. [ABSTRACT FROM AUTHOR]

In this paper, we develop a framework to analyze stochastic dynamic optimization problems in discrete time. We obtain new results about the existence and uniqueness of solutions to the Bellman equation through a notion of Banach contractions that generalizes known results for Banach and local contractions. We apply the results obtained to an endogenous growth model and compare our approach with other well‐known methods, such as the weighted contraction method, countable local contractions, and the Q‐transform. [ABSTRACT FROM AUTHOR]

This paper examines how objective and subjective heterogeneity in life expectancy affects savings behavior of healthy and unhealthy people. Using data from the Health and Retirement Study, we first document systematic biases in survival beliefs across self‐reported health: those in poor health not only have a shorter actual lifespan but also underestimate their remaining life time. To gauge the effect on savings behavior and wealth accumulation, we use an overlapping‐generations model where survival probabilities and beliefs evolve according to a health and survival process estimated from data. We conclude that differences in life expectancy are important to understand savings behavior, and that the belief biases, especially among the unhealthy, can explain up to a fifth of the observed health‐wealth gap. [ABSTRACT FROM AUTHOR]

AbstractThis study employs a non-linear state space model and applies Extended Kalman Filter to analyze the effects of shocks to output, investment and government consumption for the US economy within a stochastic intertemporal current account framework for the particular period 1989Q2-2019Q4. It is shown that consumption and current account dynamics are successfully explained and the real interest rate, which is needed to rationalize the consumption and income relationship, is found to be fairly reasonable. The parameter estimates of the macroeconomic variables in the model indicate high accuracy of forecast according to the MAPE criteria for model evaluation. The intertemporal substitution and compensation effects allow aggregate consumption function to absorb exogenous shocks and reflect the smooth transition of the economy to the reestablishment of equilibrium position. [ABSTRACT FROM AUTHOR]

This paper examines the impact of fiscal and monetary policies on carbon dioxide emissions in Trinidad and Tobago, using data from 1970 to 2020. We use a fiscal policy index based on government revenue and expenditure, a monetary policy index based on interest rates and reserve requirement data, and a Non-linear Autoregressive Distributed Lag technique. Our results show that expansionary fiscal policy raises emissions, while contractionary fiscal policy reduces emissions. Intriguingly, expansionary monetary policy increases emissions, while contractionary monetary policy lowers them. These findings hold significance for fiscal and monetary policymakers working on climate change mitigation strategies.

We introduce and quantify a new channel through which the housing market affects household spending: the home purchase channel. Households spend on average $8,000 more on home-related durables and home improvements in the 2 years following a home purchase. Expenditures on nondurables and durables unrelated to the home remain unchanged or decrease modestly. The home purchase channel played a substantial role in the Great Recession, accounting for one-third of the decline in spending on home-related durables and home improvements from 2005 to 2010. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online [ABSTRACT FROM AUTHOR]

Until the 1970s, U.S. mortgage lenders commonly discounted half of the wife's income in couples' joint mortgage applications. This changed with the introduction of antidiscrimination legislation in the 1970s, providing a natural experiment to study the relaxation of income-related borrowing constraints. I study the effects of the reform by estimating difference-in-differences regressions and solving a simple calibrated life cycle model. I find substantial positive effects of the reform on mortgage borrowing and homeownership rates of married couples with working wives. Moreover, I find a positive effect on married women's labor force participation, which strongly amplifies the homeownership and borrowing effects. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online [ABSTRACT FROM AUTHOR]

This paper focuses on assessing the significant impact of emission accounting on the energy transformation efforts of 100 leading publicly listed companies in China from 2015 to 2021. Employing the CUP-FM technique, the results indicate that a 1% increase in carbon emissions correlates with approximately a 0.17% rise in fossil fuel consumption. Additionally, a 1% increase in resources allocated to green tax initiatives is associated with roughly a 0.35% reduction in fossil fuel expenditure. The study also reveals a noteworthy correlation between ICT investments and fossil fuel expenditure. The key recommendations emerging from this research include implementing green training programs for the workforce, establishing a robust green corporate management system, and standardizing the financial reporting of sustainable activities. [ABSTRACT FROM AUTHOR]

The paper empirically investigates the saving consequence of population aging, an issue that is important for policymaking and still far from uncontroversial. Rather than providing another piece of evidence to verify the positive or negative correlation between population aging and saving, the contribution of the paper is to consider the moderating role of financial development in the nexus. In a cross-country panel data setting, we find that population aging proxied by old-age dependency decreases saving, but the effect diminishes with financial development. The opposite is found for life expectancy. Financial development weakens the saving-increasing effect of life expectancy. The findings hold for different types of saving and controlling for per-capita income growth. The data suggest that life expectancy may offset the effect of old-age dependency, limiting the influence of population aging on saving. The evidence also suggests that financial development constrains the saving effect of population aging and the need to consider a country’s extent of financial development to address the saving consequence as a population ages. [ABSTRACT FROM AUTHOR]

A comparison of the performances of pension products that ignores long-term trends might significantly overestimate the long-term impact of volatility risks while underestimating the impact of persistent, low-frequency trends. This paper proposes a comparison making use of projection models based on the long-term risk–return tradeoff proposed by Campbell and Viceira (2005) to explicitly take into account slow-moving economic trends. In order to illustrate the approach and its implications, we discuss the capital protection provided by life-cycle target-date fund strategies and minimum guarantee strategies. [ABSTRACT FROM AUTHOR]

AbstractPrior scholarship has documented and tried to explain growing inequalities in individual wealth holdings—especially between homeowners and renters—but has not considered the role of residential position in the rural-urban hierarchy. We estimate fixed-effect models of one’s rank in national net, housing and financial wealth distributions during the 2010–2018 period, based on Norwegian register data on prime-age individuals. We find dramatic geographic differences in trajectories of wealth accumulation that are strongly conditioned by tenure. Residing longer in a more urbanized area—especially in the central Oslo region—results in a substantially higher net wealth position only for homeowners. This result is driven overwhelmingly by their greatly superior gains in housing wealth over the period. By contrast, the net wealth and financial wealth positions for those who always rent are virtually indistinguishable across the hierarchy, regardless of duration of residence. Our evidence suggests that the positive correlation between earnings and rent levels across the rural-urban hierarchy yields this result. [ABSTRACT FROM AUTHOR]

Exploring approaches to improve rural household well-being has always been an important task. This research investigates the effect of Internet use on rural household well-being measured by household consumption diversity, utilizing the 2016, 2018, and 2020 China Family Panel Studies survey data. To assess rural household consumption diversity, we employ the Simpson index and Shannon−Weaver index. To address the endogeneity of Internet use, we regress an instrumental variable-based two-stage least square (2SLS) method. The results show that Internet use substantially improves rural household consumption diversity. The disaggregated analysis suggests that low-income and small households in Central China benefit the most in consumption diversity improvement from using the Internet. Moreover, the mechanism analysis results show that household deposits and households’ beliefs about accessing commercial activities can positively mediate the relationship between Internet use and consumption diversity of rural household. Our findings provide new evidence for the literature on the role of Internet use in improving household consumption diversity in rural China.

The aim of this study is to examine the factors that influence the savings rate in middle-income countries and to compare the results with other studies devoted to different subgroups of countries. Among the potential determinants of savings the study considers: demography, income level, financial sector, international trade, inflation and the structure of the economy. The research sample is confined to 44 middle-income countries and covers the period between 2000 and 2019. Six model specifications are constructed using three different estimators: FE, FGLS and PCSE. In the next step, the same models are estimated using alternative dependent variables. Results suggest that industrial share in GDP has a positive impact on the savings rate. On the other hand, a negative relationship was diagnosed between the savings and unemployment rates, the share of labour compensation in GDP, military expenditure, inflation and the young dependency ratio.