Consumption insurance with advance information

Partial Insurance, Information and Consumption Dynamics

Disentangling Insurance and Information in Intertemporal Consumption Choices

The textbook version of the life-cycle permanent income hypothesis with no liquidity constraints predicts that consumption should react very mildly to (unanticipated) transitory income changes and very strongly to permanent ones. This prediction has important policy implications in understanding the response of consumers to tax rebates or increases that are made for stabilization purposes. In r...

Disentangling Insurance and Information in Intertemporal Consumption Choices

The textbook version of the life-cycle permanent income hypothesis with no liquidity constraints predicts that consumption should react very little to transitory shocks to income and very strongly to permanent shocks. This prediction has important policy implications, i.e., to understand the response of consumers to tax rebates or increases that are made for stabilization purposes. In recent ye...

How Much Consumption Insurance Beyond Self-Insurance?*

We assess the degree of consumption smoothing implicit in a calibrated life-cycle version of the standard incomplete-markets model, and we compare it to the empirical estimates of Blundell et al. (2008) (BPP thereafter). We find that households in the model have access to less consumption smoothing against permanent earnings shocks than what is measured in the data. BPP estimate that 36% of per...

Optimization of two-stage production/inventory systems under order base stock policy with advance demand information

It is important to share demand information among the members in supply chains. In recent years, production and inventory systems with advance demand information (ADI) have been discussed, where advance demand information means the information of demand which the decision maker obtains before the corresponding actual demand arrives. Appropriate production and inventory control using demand info...