A note on the average propensity to consume, wealth and threshold adjustment

Mark Holmes () and Xin Shen ()

Economic Modelling, 2013, vol. 35, issue C, 309-313

Abstract: We explore the connection between the average propensity to consume (APC) and wealth to income ratio (WY) in the US. We find evidence of a long-run relationship characterised by threshold error correction. It is the APC that responds to long-run disequilibrium where the speed of adjustment is asymmetric insofar as being most likely fastest in regimes characterised by a high APC and low WY.

Keywords: Threshold error correction; Average propensity to consume; Wealth (search for similar items in EconPapers)
JEL-codes: C3 E1 E2 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:35:y:2013:i:c:p:309-313

DOI: 10.1016/j.econmod.2013.07.008

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