Aggregate dividends and consumption smoothing

Winifred Huang-Meier, Mark C. Freeman

Research output: Contribution to journalArticle

Abstract

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.
LanguageEnglish
Pages324-335
JournalInternational Review of Financial Analysis
Volume42
DOIs
StatusPublished - Dec 2015

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Consumption smoothing
Dividend smoothing
Labor income
Agency conflict
Investors
Business sector
Business cycles
Equity
Dividends

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Aggregate dividends and consumption smoothing. / Huang-Meier, Winifred; Freeman, Mark C. .

In: International Review of Financial Analysis, Vol. 42, 12.2015, p. 324-335.

Research output: Contribution to journalArticle

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