The relevance of Duesenberry Consumption theory: An applied case to Latin America

Jairo Parada (jparadac@uninorte.edu.co) and William Baca Mejía (wbacamejia@gmail.com)

No 7120, Revista de Economía del Caribe from Universidad del Norte

Abstract: In this paper we examine the to-date relevance of Duesenberry´sConsumption Theory through an applied case to four economiesin Latin America: Mexico, Brazil, Argentina and Colombia. Usingannual time series of these countries we show that some empiricalevidence of Duesenberry´s theory still holds and should not bediscarded in modern macroeconomics as it has happened in regularmacro text books in mainstream economics. Duesenberry´s theoryincludes important institutional factors that cannot be replaced bythe permanent income hypothesis or the life cycle hypotheses. In thepaper we explore different specifications of the consumption functionsbased on the relevant literature. Final conclusions are presented.En este trabajo se examina la relevancia de la teoría del consumo deDuesenberry a través de un estudio de caso aplicado a cuatro economíasde América Latina: México, Brasil, Argentina y Colombia. Através de series de tiempo y de algunas pruebas empíricas demostramosque la teoría de Duesenberry todavía tiene validez y no debeser descartada de la macroeconomía moderna. Dicha teoría incluyeimportantes factores institucionales que no puede ser sustituida porla hipótesis del ingreso permanente o de la hipótesis del ciclo de vida.En este artículo se explora diferentes especificaciones de las funcionesde consumo basadas en la literatura relevante.

Keywords: Consumption Theory; Duesenberry; Latin America.Teoría del Consumo; Duesenberry; Latinoamérica. (search for similar items in EconPapers)
JEL-codes: E12 E21 (search for similar items in EconPapers)
Pages: 18
Date: 2009-11-29
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000382:007120

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