Consumption adjustment to real interest rates: intertemporal substitution revisited

Article Abstract:

Consumption growth positively reacts to variations in expected real interest rates. Analysis of US aggregate data after World War II revealed that elasticity of substitution in consumption has the tendency to hover around 0.3. The level of elasticity tends to become higher in situations where time aggregation bias, different sample periods and alternative formulations of the permanent income consumption model exist.

Models, Elasticity (Economics), Substitution (Economics)

---

A reconsideration of the (in)sensitivity of tests of the intertemporal allocation of consumption to near rational alternatives

Article Abstract:

The utility loss suffered by consumers in terms of dollar value results to a shift of implications for the study of market imperfections and bounded rationality. Large utility losses are found to result from insignificant deviations from the optimal consumption allocation rule. Additionally, the utility loss incurred from near-rational behavior proved to be extremely substantial.

Analysis, Income

---

Similar abstracts:

• Abstracts: Commercial banks in investment banking: conflict of interest or certification role? Universal banking and the performance of German firms
• Abstracts: The cyclical properties of consumption growth and the real terms structure. The aggregate effects of sectoral reallocations
• Abstracts: Converting arab family businesses into publicly listed companies. Budgetary developments in the Arab countries
• Abstracts: Multiple penalty mechanisms in a principal-agent model under different institutional arrangements. Environmental crime and punishment in the Czech Republic: penalties against firms and employees
• Abstracts: Uncertainty aversion and rationality in games of perfect information. Attitudes toward the timing of resolution of uncertainty and the existence of recursive utility

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.