¹²Similar results are reported in Johnson, Parker, and Souleles (2006) and Agarwal, Liu, and Souleles (2007). Blundell, Pistaferri, and Saporta-Eksten (2016) estimate that older, wealthier households tend to use their assets more extensively to smooth spending. However, much of the empirical work (e.g., Souleles (2002), Misra and Surico (2011) or Parker, Souleles, Johnson, and McClelland (2013)) does not find that the consumption response of low-wealth or liquidity constrained households is statistically significantly higher, possibly because of measurement issues regarding credit constraints/liquid wealth and lack of statistical power. In fact, Misra and Surico (2011) report a U-shaped profile of the estimated MPC across income: Households with high levels of mortgage debt also have a large spending propensity. Our model cannot fully capture this finding given the lack of choice between liquid and illiquid assets and a meaningful accumulation of debt. We leave these points for future research.