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Abstract

According to Ando and Modigliani (1957), consumers pass different stages of a lifecycle with different impact on demand. The criticism that the life-cycle theory neglects generational effects and concentrates on ageing effects only has led to the application of the cohort analysis which decomposes not only age, but also period and cohort effects. Following these ideas, this paper presents results of a cohort analysis on food-at-home and away-from-home consumption covering 25 years of German consumption data. Special attention is given to the retirement-consumption puzzle which is the unanticipated drop in consumption after retirement. Results of seemingly unrelated regressions indicate that there are significant age, period and cohort effects of food-at-home and away-from-home expenditures which are more distinct for at-home consumption. Among others, pensioners appear to have significantly lower expenditures for food-at-home and food-away-from-home than non-retired households which points towards the existence of a retirement-consumption puzzle for these two consumption groups.

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