A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States

Joseph DeJuan (), John Seater () and Tony Wirjanto ()

Journal of Money, Credit and Banking, 2004, vol. 36, issue 6, 1091-1103

Abstract: This paper tests the prediction of the permanent income hypothesis (PIH) that news about future income induce a revision in consumption equal to the revision in permanent income. We use time-series data from 48 contiguous U.S. states to perform the test. The empirical results provide some support for the PIH across states.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:36:y:2004:i:6:p:1091-1103

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