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Economic Quarterly

Third Quarter 2019

Wealth Effects with Endogenous Retirement

Borys Grochulski and Yuzhe Zhang

In this article, we study wealth effects, i.e., the response of consumption to exogenous changes in wealth. We use a consumption-saving model with endogenous retirement to show that the endogenous response of the value of a worker's human capital to changes in her wealth helps to account for the weak wealth effects observed in the data.

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