Aggregate dividends and consumption smoothing

Winifred Huang-Meier*, Mark C. Freeman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We show that net equity payouts from the corporate sector play a crucial role in helping individuals manage their consumption path across the business cycle. In particular, we show that, as investors' desire to smooth consumption increases, optimal aggregate dividends become both more volatile and more counter-cyclical to help counterbalance pro-cyclical labor income. These findings are robust to whether or not agency conflicts exist in the economy.

Original languageEnglish
JournalInternational Review of Financial Analysis
VolumeIn press
Early online date14 Aug 2015
Publication statusPublished - 2015


  • aggregate dividend policy
  • consumption smoothing
  • dynamic stochastic general equilibrium models
  • habit formation


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