Permanent Income, Consumption, and Aggregate Constraints: Evidence from US States

Charlotte Ostergaard, Bent Sorensen and O. Yosha

Working Papers from Tel Aviv

Abstract: We remove the aggregate US-wide component in US state level disposable income and consumption and find that state-specific consumption exhibits substantially less excess sensitivity to lagged state-specific disposable income than if the aggregate component is not controlled for. This is evidence that excess sensitivity of consumption in aggreagte US data is driven to a large extent by US-wide effects since, in the aggregate, US net imports and investment do not adjust quickly to fluctuations in consumption demand.

Keywords: INCOME; CONSUMPTION; SAVINGS; LOANS; REGIONAL ANALYSIS (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Pages: 48 pages
Date: 1998
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Permanent Income, Consumption, and Aggregate Constraints: Evidence from U.S. States (1998)
Working Paper: Permanent Income, Consumption and Aggregate Constraints: Evidence from US States (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:teavfo:02-98

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