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.