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
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Citations: View citations in EconPapers (419)
Published in Journal of Business and Economic Statistics
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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) 
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:3353762
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