Time：12:00-13:00, Mar.16th, 2021 Tuesday

Venue：Tongji Building Block A Room 505

Speaker：JU Gaosheng  Fudan University, Associate Professor

Abstract: We find that common macro factors generate a “big bang/crunch” effect on micro consumption. Generally speaking, when the aggregate effect of the common factors on the consumption in low consumption-growth states is negative (resp. positive), this effect in high consumption-growth states is positive (resp. negative). The big bang/crunch suggests that consumption utility functions are not concave-shaped but S-shaped, and consumption-based macroeconomic models should build upon the S-shaped utility. The new consumption utility accounts for the unsatisfactory performance of traditional consumption-based asset pricing models. Also, the S-shaped utility helps explain the negative elasticity of intertemporal substitution reported in the literature.