An empirical study of the 'rule of thumb' consumption model in five East Asian countries

Yih-Luan Chyi and Chao-Hsi Huang

Applied Economics, 1997, vol. 29, issue 10, 1271-1282

Abstract: We investigate Campbell and Mankiw's 'rule of thumb' consumption model using data from five East Asian countries. We find that the fraction of income attributed to the 'rule of thumb' consumers are generally substantial for these countries. In particular, the fractions for them are generally higher than those of OECD countries found in previous studies. Furthermore, the estimates of the fractions are robust to variant specifications of the 'rule of thumb' consumption model. These results are favourable to he 'liquidity constraint' justification of the 'rule of thump' consumption model.

Date: 1997
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DOI: 10.1080/00036849700000017

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