An age-structured model for the effect of interest rate changes on consumption

dc.contributor.author	Kozlov, Roman
dc.date.accessioned	2021-08-30T13:45:28Z
dc.date.available	2021-08-30T13:45:28Z
dc.date.issued	2021-08-30
dc.identifier.issn	1500-4066
dc.identifier.uri	https://hdl.handle.net/11250/2771796
dc.description.abstract	A model for the effect of an interest rate change on household consumption is developed. The approach is age-structured: households reconsider their consumption patterns at the moment of the interest rate change and the changes of the consumption patterns are age dependent. These changes for different age groups contribute to the modification of aggregate consumption. Numerical simulation shows that a decrease of the interest rate leads to a consumption boost (a substantial increase of consumption in the short run), which diminishes as time passes and consumption gets fully adjusted to the new interest rate value. The consumption boost is achieved by an increase of the debt load.	en_US
dc.language.iso	eng	en_US
dc.publisher	FOR	en_US
dc.relation.ispartofseries	Discussion paper;8/21
dc.subject	Interest rate change	en_US
dc.subject	consumption	en_US
dc.subject	aggregate consumption	en_US
dc.subject	debt load	en_US
dc.title	An age-structured model for the effect of interest rate changes on consumption	en_US
dc.type	Working paper	en_US
dc.source.pagenumber	35	en_US