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.
| Original language | English |
|---|---|
| Pages (from-to) | 324-335 |
| Number of pages | 12 |
| Journal | International Review of Financial Analysis |
| Volume | 42 |
| Early online date | 14 Aug 2015 |
| DOIs | |
| Publication status | Published - 1 Dec 2015 |
Keywords
- aggregate dividend policy
- consumption smoothing
- habit formation
- dynamic stochastic general equilibrium models
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
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Winifred Huang
- Management - Senior Lecturer (Associate Professor)
- Accounting, Finance & Law
- Centre for Research in Entrepreneurship and Innovation at Bath
- Centre for Governance, Regulation and Industrial Strategy
- EPSRC Centre for Doctoral Training in Advanced Automotive Propulsion Systems (AAPS CDT)
Person: Research & Teaching, Affiliate staff