Explaining Consumption: A Simple Test of Alternative Hypotheses

Tamim Bayoumi

No 1997/056, IMF Working Papers from International Monetary Fund

Abstract: A method of testing the relative importance for consumption of risk sharing behavior and changes in current income is proposed and estimated using data across Canadian provinces. The focus of the estimation is less on whether or not the risk sharing model can be rejected than on how much each of these hypotheses can contribute to explaining overall variation in consumption. Both types of behavior are found to be statistically significant, but the risk sharing model is found to explain considerably more of the growth in consumption than does changes in income.

Keywords: WP; constant term; Consumption; Risk Sharing; Liquidity Constraints; income model; consumption model; nondurable consumption; income term; income coefficient; consumption pattern; consumption datum; income hypothesis; Income; Personal income; Disposable income; Government consumption (search for similar items in EconPapers)
Pages: 29
Date: 1997-05-01
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=2179 (application/pdf)

Related works:
Journal Article: Explaining Consumption: A Simple Test of Alternative Hypotheses (1997)
Working Paper: Explaining Consumption: A Simple Test of Alternative Hypotheses (1995)
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:imf:imfwpa:1997/056

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi (amodi@imf.org).