On the distributional effects of income in an aggregate consumption relation

Manisha Chakrabarty (), Anke Schmalenbach and Jeffrey Racine

Canadian Journal of Economics, 2006, vol. 39, issue 4, 1221-1243

Abstract: In this paper we analyse the influence of characteristics of the income distribution in modelling aggregate consumption expenditure. We model the aggregate consumption relation of a heterogeneous population, using a statistical distributional approach of aggregation, and apply it to UK-Family Expenditure Survey data. A bootstrap test based on a non-parametric estimation methodology, which accounts for the presence of continuous and discrete variables, suggests that the mean and the dispersion of the income distribution significantly influence aggregate consumption expenditure. Also, the parameters of the aggregate relation are time varying. These findings have implications for constructing empirically sound models of aggregate consumption expenditure.

JEL-codes: C12 D12 (search for similar items in EconPapers)
Date: 2006
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Journal Article: On the distributional effects of income in an aggregate consumption relation (2006)
Working Paper: On the Distributional Effects of Income in an Aggregate Consumption Relation (2004)
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