We use sizable lottery prizes in Norwegian administrative panel data to explore how transitory income shocks are spent and saved over time, and how households’ marginal propensities to consume (MPCs) vary with household characteristics and shock size. We find that spending peaks in the year of winning and gradually reverts to normal within five years. Controlling for all items on households’ balance sheets and characteristics such as education and income, it is the amount won, age, and liquid assets that vary systematically with MPCs. Low-liquidity winners of the smallest prizes (around USD 1,500) are estimated to spend all within the year of winning. The corresponding estimate for high-liquidity winners of large prizes (USD 8,300-150,000) is slightly below one half. While conventional models will struggle to account for such high MPC levels, we show that a two-asset life-cycle model with a realistic earnings profile and a luxury bequest motive can account for both the time profile of consumption responses and their systematic co-variation with observables.
Fagereng, Andreas; Holm, Martin Blomhoff & Torstensen, Kjersti Næss (2021)
We provide a new estimate of household-level housing wealth in Norway between 1993 and 2015 using an ensemble machine learning method on housing transaction data. The new housing wealth measure is an improvement over existing data sources for two reasons. First, the model outperforms previously applied regression models in out-of-sample prediction precision. Second, we extend the sample of estimated housing wealth by including cooperative units, non-id apartments, and cabins.
Holm, Martin Blomhoff (2018)
Consumption with liquidity constraints: An analytical characterization
How do liquidity constraints affect households? This is a well-researched subject with remarkably few theoretical results. This paper bridges this gap by providing a closed form expression for consumption with liquidity constraints for a wide class of utility functions (HARA). Using this expression, I prove that the consumption function is strictly concave in wealth if a relevant liquidity constraint exists. Moreover, households respond to a tightening of the liquidity constraint by reducing consumption, becoming more sensitive to wealth changes, and having a “more” concave consumption function in wealth. These results thus provide theoretical underpinnings for how contractions in credit supply affect households
Holm, Sverre & Holm, Martin Blomhoff (2017)
Restrictions on wave equations for passive media
Journal of the Acoustical Society of America, 142(4), s. 1888- 1896. Doi: 10.1121/1.5006059
Holm, Martin Blomhoff (2016)
On the concavity of the consumption function with liquidity constraints
Estimating the Elasticity of Intertemporal Substitution using Dividend Tax News Shocks.
[Academic lecture]. Centre for Household Finance and Macroeconomic Research (HOFIMAR) Workshop.
Holm, Martin B.; Heimdal, Knut Ward & Kordt, Amund H. (2024)
Local fiscal multipliers: Evidence from Norway
[Academic lecture]. Forskermøtet 2024.
We estimate local government spending multipliers using administrative data on municipalities in Norway. Based on identified shocks we estimate the dynamic response of gross production across geographical units and sectors of the economy. We find that the multipliers increase with the home bias in consumption. The results indicate that spending multiplier is closely linked to import leakages, which are reduced as the size of the economy increases. We observe that the public sector is the first to be affected by public spending, before the multiplier builds up in the private sector. We also show that similar results can be obtained by using a structural vector autoregressive models (SVAR) with various identifying assumptions.
Holm, Martin B. (2024)
Inflasjon: Tanker om de siste to årene
[Popular scientific article]. Samfunnsøkonomen, 138(1), s. 5- 14.
Tretvoll, Håkon; Crawley, Edmund & Holm, Martin Blomhoff (2023)
A Parsimonious Model of Idiosyncratic Income
[Academic lecture]. Seminar, Norges Bank.
Holm, Martin B. & Martinsen, Kjetil (2023)
Norges Bank Watch 2023 – An independent evaluation of monetary policy in Norway
[Report]. Center for Monetary Economics.
Holm, Martin B. (2023)
Discussion of "How do households respond to income shocks?"
[Academic lecture]. Fed St. Louis-JEDC-SCG-SNB-Conference Heterogeneity and Macroeconomics of Labor Markets.
Crawley, Edmund; Holm, Martin B. & Tretvoll, Håkon (2022)
A Parsimonious Model of Idiosyncratic Income
[Academic lecture]. Society of Economics of the Household (SEHO).
Holm, Martin B.; Paul, Pascal & Tischbirek, Andreas (2022)
Monetary Transmission under the Microscope
[Academic lecture]. Seminar, Bank of Colombia.
Fagereng, Andreas; Gulbrandsen, Magnus Andreas Haare, Holm, Martin B. & Natvik, Gisle James (2022)
How Does Monetary Policy Affect Household Indebtedness?
[Academic lecture]. Bank of Canada.
Fagereng, Andreas; Gomez, Matthieu, Gouin-Bonenfant, Emilien, Holm, Martin B., Moll, Benjamin & Natvik, Gisle James (2022)
Asset-Price Redistribution
[Academic lecture]. Banque de France.
Fagereng, Andreas; Gomez, Matthieu, Gouin-Bonenfant, Emilien, Holm, Martin B., Moll, Benjamin & Natvik, Gisle James (2022)
Asset-Price Redistribution
[Academic lecture]. Workshop at Norges Bank.
Fagereng, Andreas; Gomez, Matthieu, Gouin-Bonenfant, Emilien, Holm, Martin B., Moll, Benjamin & Natvik, Gisle James (2022)
Asset-Price Redistribution
[Academic lecture]. Copenhagen University.
Fagereng, Andreas; Gomez, Matthieu, Gouin-Bonenfant, Emilien, Holm, Martin B., Moll, Benjamin & Natvik, Gisle James (2022)
Asset-Price Redistribution
[Academic lecture]. EEA-ESEM.
Crawley, Edmund; Holm, Martin B. & Tretvoll, Håkon (2022)
A Parsimonious Model of Idiosyncratic Income
[Academic lecture]. Seminar, Sciences Po.
Crawley, Edmund; Holm, Martin B. & Tretvoll, Håkon (2022)
A Parsimonious Model of Idiosyncratic Income
[Academic lecture]. NorMac.
Edmund, Crawley; Holm, Martin B. & Tretvoll, Håkon (2022)
A Parsimonious Model of Idiosyncratic Income
[Academic lecture]. EEA-ESEM.
Holm, Martin Blomhoff; Haugland, Kjersti & Sharon, Zollner (2022)
Norges Bank Watch 2022
[Report]. Center for Monetary Economics, BI Norwegian Business School.
Fagereng, Andreas; Holm, Martin Blomhoff, Gulbrandsen, Magnus & Natvik, Gisle James (2021)
How Does Monetary Policy Affect Household Indebtedness?
[Article in business/trade/industry journal]. Working Paper, Norges Bank, 2021(5), s. 1- 24.
Holm, Martin Blomhoff; Paul, Pascal & Tischbirek, Andreas (2020)
The Transmission of Monetary Policy under the Microscope
[Report]. Federal Reserve of San Francisco.
Berg, Oddmund; von Brasch, Thomas Rolf Lydersen Lystad, Cappelen, Ådne, Holm, Martin Blomhoff, Raknerud, Arvid, Tretvoll, Håkon & Vigtel, Trond Christian (2020)
Drivkrefter bak svak etterspørsel i økonomien: Utredning for Sysselsettingsutvalget.
[Report]. Statistisk sentralbyrå.
Denne rapporten er skrevet på oppdrag for Sysselsettingsutvalget. Sysselsettingsutvalget skal analysere utviklingen i sysselsettingen i Norge og foreslå tiltak for å øke sysselsettingen. Arbeidet er delt opp i to faser. Fase én var ferdig da ekspertgruppen la fram sine forslag for økt sysselsetting 28. mars 2019. I fase to er utvalget utvidet og inkluderer partene i arbeidslivet. Fase to begynte 5.april 2019. I denne rapporten analyseres hvordan markedsmakt og ulikhet kan påvirke den økonomiske aktiviteten, herunder sysselsettingen.
Holm, Martin Blomhoff; Fagereng, Andreas, Guiso, Luigi & Pistaferri, Luigi (2020)
K-returns to Education
[Article in business/trade/industry journal]. Centre for Economic Policy Research. Discussion papers
We exploit a school reform that increased the length of compulsory schooling in Norway in the 1960s to study the causal effect of formal general education on returns on wealth (k-returns). OLS estimates reveal a strong, positive and statistically significant correlation between education and returns on individual net worth. This effect disappears in IV regressions, implying that general education has no causal effect on individual performance in capital markets, whose heterogeneity largely reflects non-acquired ability. On the contrary, we find that education causes higher returns in the labor market (l-returns). We speculate about possible rationales for this important asymmetry.
Fagereng, Andreas; Holm, Martin Blomhoff, Moll, Benjamin & Natvik, Gisle James (2019)
Saving Behavior Across the Wealth Distribution: The Importance of Capital Gains
[Report]. NBER Working paper.
Fagereng, Andreas; Holm, Martin Blomhoff, Moll, Benjamin & Natvik, Gisle James (2019)
Saving Behavior Across the Wealth Distribution
[Academic lecture]. Annual Congress of the European Economic Association.
Fagereng, Andreas; Holm, Martin Blomhoff, Moll, Benjamin & Natvik, Gisle James (2019)
Saving Behavior Across the Wealth Distribution: The Importance of Capital Gains
[Academic lecture]. Konferanse: New Consumption Data, Universitetet i København.
Fagereng, Andreas; Natvik, Gisle James, Holm, Martin Blomhoff & Moll, Benjamin (2019)
Saving Behavior Across the Wealth Distribution
[Academic lecture]. American Economic Association: Annual Meeting.
Fagereng, Andreas; Natvik, Gisle James, Holm, Martin Blomhoff & Moll, Benjamin (2019)
Saving Behavior Across the Wealth Distribution: The Importance of Capital Gains
[Academic lecture]. NBER Summer Institute, EF&G Research Meeting.
Fagereng, Andreas; Holm, Martin Blomhoff & Natvik, Gisle James (2018)
MPC Heterogeneity and Household Balance Sheets
[Academic lecture]. Workshop on New Consumption Data.
Natvik, Gisle James; Holm, Martin Blomhoff & Fagereng, Andreas (2017)
MPC heterogeneity and household balance sheets
[Academic lecture]. Santa Clare University research seminar.
Holm, Martin Blomhoff; Natvik, Gisle James & Fagereng, Andreas (2017)
MPC heterogeneity and household balance sheets
[Academic lecture]. The New Macroeconomics of Aggregate Fluctuations and Stabilisation Policy.
Natvik, Gisle James; Holm, Martin Blomhoff & Fagereng, Andreas (2017)
MPC heterogeneity and household balance sheets
[Academic lecture]. CEPR Workshop on Household Finance, Spring 2017.
Holm, Martin Blomhoff; Fagereng, Andreas & Natvik, Gisle James (2017)
MPC Heterogeneity and Household Balance Sheets
[Academic lecture]. Annual Meeting of the European Economic Association.
Holm, Martin Blomhoff; Fagereng, Andreas & Natvik, Gisle James (2017)
MPC Heterogeneity and Household Balance Sheets
[Academic lecture]. Society of Economic Dynamics Annual Meeting.
Holm, Martin Blomhoff; Fagereng, Andreas & Natvik, Gisle James (2017)
MPC Heterogeneity and Household Balance Sheets
[Academic lecture]. NBER Summer Institute.
Holm, Martin Blomhoff (2017)
Monetary Policy Transmission with Income Risk
[Academic lecture]. Econometric Society European Winter Meething.
Holm, Martin Blomhoff; Fagereng, Andreas & Natvik, Gisle James (2016)
MPC Heterogeneity and Household Balance Sheets
[Academic lecture]. Annual Conference of the International Association of Applied Econometrics.
Holm, Martin Blomhoff; Natvik, Gisle James & Fagereng, Andreas (2016)
MPC Heterogeneity and Household Balance Sheets
[Academic lecture]. Econometric Society European Winter Meeting.