Consumption Smoothing after the Final Mortgage Payment
Testing the Magnitude Hypothesis
Bibliographic Data
| ID | 19320060 |
|---|---|
| Authors | Barry Scholnick (0009-0001-1057-2753, University of Alberta, corresponding author) |
| Year | 2013 |
| Volume | 95 |
| Issue | 4 |
| Pages | 1444-1449 |
| Publication date | 2013-10-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | The Review of Economics and Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0034-6535 • E-ISSN: 1530-9142 |
| Publisher | MIT Press - Journals (PUBLISHER) |
| DOI | 10.1162/rest_a_00313 |
| OpenAlex | W3122057749 |
| Language | EN |
| Citations received | 4 |
| References cited | 10 |
We examine whether the magnitude of an anticipated income change affects consumption smoothing (the magnitude hypothesis). Although this hypothesis has been discussed for fifty years, we are one of the first to provide formal statistical evidence to support it. We consider the natural experiment of an individual's final mortgage payment, an anticipated income change, and examine how it affects credit card expenditure. We can identify causality because the dates of final mortgage payments across individuals are uncorrelated with unobserved determinants of consumption. Using an event study methodology, we provide evidence to support the magnitude hypothesis
Business cycle · Causality (physics) · Consumption (sociology) · Consumption smoothing · Econometrics · Economics · Macroeconomics · Magnitude (astronomy) · Payment · Smoothing · Statistics · Uncorrelated · Decision-Making and Behavioral Economics · Finance · Financial Literacy, Pension, Retirement Analysis · Housing Market and Economics · Mathematics
| Unique citing works | 4 |
|---|---|
| Citations per year | 0,44 |
| Citation span | 2017 - 2024 (8) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 4 |