2134/18797 Winifred (Shih-Yun) Huang-Meier Winifred Huang-Meier Mark Freeman Mark Freeman Aggregate dividends and consumption smoothing Loughborough University 2015 Aggregate dividend policy Consumption smoothing Habit formation Dynamic stochastic general equilibrium models Law Business and Management not elsewhere classified 2015-09-18 12:09:32 Journal contribution https://repository.lboro.ac.uk/articles/journal_contribution/Aggregate_dividends_and_consumption_smoothing/9500924 We show that net equity payouts from the corporate sector play a crucial role in helping individuals manage their consumption path across the business cycle. In particular, we show that, as investors’ desire to smooth consumption increases, optimal aggregate dividends become both more volatile and more counter-cyclical to help counterbalance pro-cyclical labor income. These findings are robust to whether or not agency conflicts exist in the economy.