Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202067 
Year of Publication: 
2019
Series/Report no.: 
DIW Discussion Papers No. 1816
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
In this study, we set up a DSGE model with upward looking consumption comparison and show that consumption externalities are an important driver of consumer credit dynamics. Our model economy is populated by two different household types. Investors, who hold the economy's capital stock, own the firms and supply credit, and workers, who supply labor and demand credit to finance consumption. Furthermore, workers condition their consumption choice on the investors' level of consumption. We estimate the model and find a significant keeping up-mechanism by matching business cycle statistics. In reproducing credit moments, our proposed model significantly outperforms a model version in which we abstract from consumption externalities.
Subjects: 
income redistribution
consumer credit
relative consumption motive
business cycles
JEL: 
E21
E32
E44
Document Type: 
Working Paper

Files in This Item:
File
Size
621.45 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.