Economics at your fingertips  

What Can Explain Excess Smoothness and Sensitivity of State-Level Consumption?

Maria Luengo-Prado () and Bent Sorensen

The Review of Economics and Statistics, 2008, vol. 90, issue 1, 65-80

Abstract: This article estimates marginal propensities to consume (MPC) out of current and lagged income for U.S. states using panel data regressions that control for time-specific and state-level fixed effects. The MPCs vary across states; in particular, the MPC out of current income is higher in states where income is more persistent, and the MPC out of lagged income is lower in agricultural states. We show that the estimated MPCs can be matched by a model of forward-looking consumers that includes all of the following features: time aggregation, durable goods, impatience, credit constraints, and risk sharing. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (24) Track citations by RSS feed

Downloads: (external link) link to full text (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: What Can Explain Excess Smoothness and Sensitivity of State-Level Consumption? (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Amitabh Chandra, Olivier Coibion, Bryan S. Graham, Shachar Kariv, Amit K. Khandelwal, Asim Ijaz Khwaja, Brigitte C. Madrian and Rohini Pande

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by Ann Olson ().

Page updated 2019-04-10
Handle: RePEc:tpr:restat:v:90:y:2008:i:1:p:65-80