The Impact of Age Distribution Variables on the Long Run Consumption Function

Clifford L.F. Attfield and Edmund Cannon

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: Modigliani's Life Cycle Hypothesis (LCH) predicts that demographic variables should play a significant role in our understanding of the relationship between consumption and income. Understanding this relationship is particularly important given the demographic changes expected in the next few decades. Unfortunately, evidence for the importance of demographic variables is mixed: unsurprisingly since such variables change relatively slowly and most analysis is confined to post war data. In this paper we use a much longer time series of aggregate variables (1856-1996) which models consumption, income and demographic effects in a vector error correction framework allowing for structural breaks. Our analysis shows that demographic effects have an important effect in the manner predicted by the LCH.

Keywords: Consumption; ageing population; breaks in trend. (search for similar items in EconPapers)
JEL-codes: C51 C53 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2003-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.bristol.ac.uk/efm/media/workingpapers/w ... pdffiles/dp03546.pdf (application/pdf)

Related works:
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: https://EconPapers.repec.org/RePEc:bri:uobdis:03/546

Access Statistics for this paper

More papers in Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK
Bibliographic data for series maintained by Vicky Jackson ().