Working Papers:
Welfare Implications of Endogenous Information Acquisition and Monopoly Power
I study the effect of endogenous information acquisition by a monopolistic firm on consumer welfare. Information affects the welfare through two opposing channels: more information leads to more efficient use of labor, but also more consumer surplus extracted. I show that information in a decentralized economy is over-acquired relative to welfare-optimal and social planner benchmarks. The welfare-optimal benchmark assumes that a policymaker directly chooses information acquired by the monopolist to maximize welfare. I also study the welfare implications of the monopolistic information market. Higher price for information can be beneficial for the welfare if the disutility from the extracted consumer surplus dominates the losses from the less efficient use of labor.
This paper provides an explanation for the conflicting evidence on the relation between marginal propensity to consume and liquid assets. I study marginal propensity to consume (MPC) out of liquid assets in an environment where agents infrequently update their financial plans and choose between consumption and savings as a decision variable in the utility maximization problem. I show that the average MPC consists of the average slope of policy functions in the economy and additional component resulting from agents switching between the decision variables. I assess the component in a dynamical consumption-savings model with income fluctuations, and demonstrate that the presence of this component can explain conflicting evidence on the negative relation between MPC and liquid assets.
Published Papers:
Estimation of the consumption function of Russian households using RLMS microdata P. Koval, A. Polbin, Economics Bulletin 40 (3), 2254-2261
In this paper we consider a simple model of permanent income in which households consume a certain share of permanent income, the value of which is estimated using the adaptive expectations process based on the dynamics of actual income. The parameter of propensity to consume itself depends on the characteristics of a household, such as income decile, household size, number of children, level of education, etc. The model employs RLMS microdata using OLS and IV methods and provides interpretable estimates of propensity to consume. The results can be used for the purposes of formulating economic policy.