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The Adjustment of Consumption to Income Changes Across Chinese Provinces

Joseph DeJuan (), Tony Wirjanto () and Xinpeng Xu ()
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Joseph DeJuan: Department of Economics, University of Waterloo
Tony Wirjanto: School of Accounting & Finance and Department of Statistics & Actuarial Science, University of Waterloo
Xinpeng Xu: School of Accounting and Finance, Faculty of Business, Hong Kong Polytechnic University

Annals of Economics and Finance, 2016, vol. 17, issue 2, 235-253

Abstract: This paper examines a key stochastic implication of the canonical version of the permanent income model that new information about future income should give rise to an adjustment in consumption equal in magnitude to the adjustment in permanent income. Using data from 29 Chinese provinces, the empirical results are consistent with the model.

Keywords: Chinese provinces; Consumption; Permanent Income (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 2016
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