Permanent Income, Current Income, and Consumption
John Campbell () and
N. Gregory Mankiw ()
Journal of Business & Economic Statistics, 1990, vol. 8, issue 3, 265-79
This article reexamines the consistency of the permanent-income hypothesis with aggregate postwar U.S. data. The permanent-income hypothesis is nested within a more general model in which a fraction of income accrues to individuals who consume their current income rather than their permanent income. This fraction is estimated to be about 50 percent, indicating a substantial departure from the permanent-income hypothesis. Our results cannot be easily explained by time aggregation for small-sample bias, by managers in the real interest rate, or by nonseparabilities in the utility function of consumers.
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Working Paper: Permanent Income, Current Income, and Consumption (1990)
Working Paper: Permanent Income, Current Income, and Consumption (1987)
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Persistent link: https://EconPapers.repec.org/RePEc:bes:jnlbes:v:8:y:1990:i:3:p:265-79
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