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Aggregate dividends and consumption smoothing

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journal contribution
posted on 18.09.2015 by Winifred (Shih-Yun) Huang-Meier, Mark Freeman
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.

History

School

  • Business and Economics

Department

  • Business

Published in

International Review of Financial Analysis

Citation

HUANG-MEIER, W. and FREEMAN, M.C., 2016. Aggregate dividends and consumption smoothing. International Review of Financial Analysis, 42, pp.324-335.

Publisher

© Elsevier

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2016

Notes

This paper was accepted for publication in the journal International Review of Financial Analysis and the definitive published version is available at http://dx.doi.org/10.1016/j.irfa.2015.08.008

ISSN

1057-5219

Language

en

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