Permanent Income, Current Income, and Consumption

John Campbell and N. Gregory Mankiw

Scholarly Articles from Harvard University Department of Economics

Abstract: This article reexamines the consistency of the permanent-income hypothesis with aggregate postwar U.S. data. The permanent-income hypothesis is nested within a more general model in which a fraction of income accrues to individuals who consume their current income rather than their permanent income. This fraction is estimated to be about 50%, indicating a substantial departure from the permanent-income hypothesis. Our results cannot be easily explained by time aggregation or small-sample bias, by changes in the real interest rate, or by nonseparabilities in the utility function of consumers.

Date: 1990
References: Add references at CitEc
Citations: View citations in EconPapers (418)

Published in Journal of Business and Economic Statistics

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/3353762/campbell_permanent.pdf (application/pdf)

Related works:
Journal Article: Permanent Income, Current Income, and Consumption (1990)
Working Paper: Permanent Income, Current Income, and Consumption (1987)
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:hrv:faseco:3353762

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().