Date: Tuesday, 8 October 2024, at 12:15 pm
Venue: Seminar Room Bruguier Pacini, DEM
Speaker and Title:
Paulo Medeiros (Department of Mathematics and Applications – University of Milano-Bicocca)
Consumption Behavior, Savings Targets and Learning Dynamics
Discussant: David Cano Ortiz (University of Pisa)
Abstract:
This study introduces an innovative approach to address the limitations of classical consumption-savings theories, particularly concerning variations in the marginal propensity to consume (MPC) in response to transitory income shocks. The proposed model integrates a savings target function that influences agents’ saving decisions alongside a learning mechanism that enables agents to adjust to the optimal savings target over time. Numerical simulations demonstrate the model’s strong alignment with empirical data, highlighting significant MPC responses to income shocks while preserving key phenomena such as consumption smoothing and long-term convergence to a steady state..
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