“Rule-of-Thumb” Consumption, Intertemporal Substitution, and Risk Aversion
Bibliographic Data
| ID | 19419117 |
|---|---|
| Authors | Christian E Weber (0000-0001-8951-4398, Seattle University, corresponding author) |
| Year | 2000 |
| Volume | 18 |
| Issue | 4 |
| Pages | 497-502 |
| Publication date | 2000-10-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Business and Economic Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0735-0015 • E-ISSN: 1537-2707 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/07350015.2000.10524888 |
| OpenAlex | W2115366827 |
| Language | EN |
| Citations received | 3 |
| References cited | 21 |
This article reexamines evidence that some 50% of disposable income goes to households who simply consume their current incomes. Previous studies of such “rule-of-thumb” behavior have typically used log-linear Euler equations and have not distinguished between intertemporal substitution and relative risk aversion. In contrast, I use generalized method of moments to estimate the importance of rule-of-thumb behavior and separate intertemporal substitution from risk aversion by using the Epstein–Zin utility function. Using postwar U.S. data, I cannot reject the hypothesis that all income goes to permanent-income households—that is, that there are no rule-of-thumb households
Econometrics · Economics · Expected utility hypothesis · Mathematical economics · Microeconomics · Monetary economics · Permanent income hypothesis · Rule of thumb · Computer Science · Economic theories and models · Financial Literacy, Pension, Retirement Analysis · Housing Market and Economics · Mathematics
The Sensitivity of Consumption to Transitory Income
Generalized Instrumental Variables Estimation of Nonlinear Rational Expectations Models
Permanent Income, Current Income, and Consumption
Consumption Adjustment under Time-Varying Income Uncertainty
Intertemporal Substitution in Consumption
Substitution, Risk Aversion, and the Temporal Behavior of Consumption and Asset Returns
The Adjustment of Consumption to Changing Expectations About Future Income
Stochastic Consumption, Risk Aversion, and the Temporal Behavior of Asset Returns
Consumption and Liquidity Constraints
The Permanent Income Hypothesis
Applications of Generalized Method of Moments Estimation
| Unique citing works | 3 |
|---|---|
| Citations per year | 0.12 |
| Citation span | 2001 - 2013 (13) |
| Citation velocity | historical |
| Highly cited | No |