NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Macroeconomics of Subsistence Points

Morten O. Ravn, Stephanie Schmitt-Grohe, Martin Uribe

NBER Working Paper No. 11012
Issued in December 2004
NBER Program(s):   EFG

This paper explores the macroeconomic consequences of preferences displaying a subsistence point. It departs from the existing related literature by assuming that subsistence points are specific to each variety of goods rather than to the composite consumption good. We show that this simple feature makes the price elasticity of demand for individual goods procyclical. As a result, markups behave countercyclically in equilibrium. This implication is in line with the available empirical evidence.

download in pdf format
   (217 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11012

Published: Ravn, Morten, Stephanie Schmitt-Grohe and Martin Uribe. “The Macroeconomics of Subsistence Points.” Macroe-conomic Dynamics 12 (2008): 136-147.

Users who downloaded this paper also downloaded* these:
Benhabib, Schmitt-Grohé, and Uribe w10272 Chaotic Interest Rate Rules: Expanded Version
Schmitt-Grohé and Uribe w9270 Closing Small Open Economy Models
Barrow, Claessens, and Schanzenbach w18889 The Impact of Chicago's Small High School Initiative
Fischer, Sahay, and Vegh w8930 Modern Hyper- and High Inflations
Stiglitz w1442 Theories of Wage Rigidity
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us