Alparslan Tuncay

Research Interests

Macro Labor, Macro Finance

Working Papers

The Taste for Luxuries and Financial Risk Taking pdf 

Luxury expenditure vary considerably even among households with similar socioeconomic characteristics. Households who display a greater appetite for luxuries are expected to have less curved marginal utility in wealth and so choose riskier portfolios from the perspective of economic theory. Consistent with this expectation, I find that these households more likely participate to risky asset markets and hold more risky assets compared to others with similar income and wealth using CE Expenditure Survey. This finding is robust to alternative cutoffs of expenditure elasticity for being a luxury and sample years.

Delay Marriage and Marry Your Like: Did It Contribute to Income Inequality? pdf Appendix 

Household income inequality in the U.S. has increased substantially since the 1970s, and the marriage age has risen considerably during this period. Using the access to legalized abortion by young single women as an instrument for marriage age, I find that increased marriage age contributed to income inequality significantly by increasing the level of spousal income correlation. I rationalize this finding quantitatively with a model where individuals learn their income profiles better as they work more years and, therefore, more likely marry similar-income spouses as they delay marriage. The model explains well the rich heterogeneity in the evolution of spousal income correlation by education.

The Luxury Taste and the Sensitivity of Household Expenditure to Business Cycle Fluctuations pdf 

I study the consumption response to business cycle fluctuations and analyze how these vary by idiosyncratic taste for luxuries. The theories on the intertemporal substitution in consumption posit that households with less curvature on the utility function should smooth their consumption less. Consistent with these theories, I find that households with a greater taste for luxuries lower their expenditures significantly more in response to increases in real interest rate and unemployment rate compared to otherwise similar households using data from the Consumer Expenditure Survey.

Pairing Games and Markets, with Ahmet Alkan [pdf] 

Pairing Games or Markets studied here are the non-two-sided NTU generalization of assignment games. We show that the Equilibrium Set is nonempty, that it is the set of stable allocations or the set of semistable allocations, and that it has several notable structural properties. We also introduce the solution concept of pseudostable allocations and show that they are in the Demand Bargaining Set. We give a dynamic Market Procedure that reaches the Equilibrium Set in a bounded number of steps. We use elementary tools of graph theory and a representation theorem obtained here.

Research Work-In Progress

The Taste for Luxuries and Risk Premium

There is a significant difference in the volatility of luxury expenditure between households with risky assets and those without risky assets. Using CE Expenditure Survey, I find that the luxury expenditure of households with risky assets covaries more with excess return of stocks (over the risk-free rate) than that of households without risky assets. However, the expenditure of basic goods covaries too little with the excess return for all households with and without risky assets. I try to explain these findings in a model with a heterogeneity in the taste for luxury where utility is modeled as a function of the consumption of both a basic good and a luxury good.

Marriage Market in the Macroeconomy

Marriage market has transformed remarkably since the 1970s in the U.S., with the rising marriage age and declining marriage rates. This paper analyzes the impact of this transformation on wealth and consumption inequalities using a life-cycle consumption-savings model where individuals face uncertainty about future labor incomes which resolves through income realizations. I find that the increase in marriage age considerably increased the wealth and consumption inequalities by increasing the spousal association in incomes and wealth. The model also explains well the rich heterogeneity in the evolution of spousal association in income and wealth by education groups.

Teaching

Intermediate Macroeconomics (Econ 227)

• Lecture Notes: [Lecture1] [Lecture2] [Lecture3] [Lecture4] [Lecture5] [Lecture6] [Lecture7] [Lecture8] [Lecture9] [Lecture10] [Lecture11] [Lecture12] [Lecture13] [Lecture14] [Lecture15] [Lecture16] [Lecture17] [Lecture18] [Lecture19] [Lecture20] [Lecture21] [Lecture22] [Lecture23] 

• Slides: [Week1] [Week2] [Week3] [Week4] [Week5] [Week6] [Week7] [Week8] [Week9] [Week10] [Week11] [Week12] [Week13] 

Economic Development II (Econ 240)

Econometrics (Econ 214)

Microeconomic Theory (Econ 317)

Elementary Macroeconomic Theory (Econ 212)