Intertemporal Choice and the Cross Sectional Variance of Marginal Utility

Orazio Attanasio () and Tullio Jappelli ()

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: The theory of intertemporal choice predicts that the cross-sectional variance of the marginal utility of consumption is equal to its own lag plus a constant and a random component. Using general preference specifications and some assumptions about the nature of the random component, we provide an explicit test of this hypothesis. Our approach circumvents the necessity to identify a pure age profile of the cross sectional variance of consumption and yields a well specified statistical test. This test is applied to data from the United States, the United Kingdom and Italy. The results are remarkably consistent with the restrictions implied by the theory of intertemporal consumption choices.

Keywords: intertemporal choices; consumption inequality (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 1998-07-01
View list of references View citations in EconPapers

Published in Review of Economics and Statistics, February 2001, vol. 83, issue 1, pages 13-27

Downloads: (external link)
http://www.csef.it/WP/wp6.pdf (application/pdf)

Related works:
Working Paper: Intertemporal Choice and the Cross-Sectional Variance of Marginal Utility (1998)
Journal Article: Intertemporal Choice And The Cross-Sectional Variance Of Marginal Utility (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:sef:csefwp:06.1998

Access Statistics for this paper

More papers in CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy
Contact information at EDIRC.
Series data maintained by Lia Ambrosio ().