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Title: The effect of current income on aggregate consumption
Author: Chakrabarty, Manisha
Schmalenbach, Anke
Keywords: Consumption
Quantitative methods
Issue Date: 2002
Publisher: Economic & Social Research Institute
Citation: Chakrabarty, Manisha; Schmalenbach,Anke. 'The effect of current income on aggregate consumption'. - Economic & Social Review, Vol. 33, No. 3, Winter, 2002, pp. 297-317, Dublin: Economic & Social Research Institute
Abstract: Using the statistical distributional approach of aggregation by Hildenbrand and Kneip (1999, 2002), this paper attempts to find out to what extent current labour income can explain the relative change in aggregate consumption expenditure. The coefficients of the changes in the income distribution are estimated as an average derivative of the cross-section Engel curve. We use the UK-FES [1974-1993] to estimate these coefficients separately for each year by a nonparametric estimation procedure. It is found that the change in current labour income plays a significant role for the commodity groups services and total nondurable, thereby contradicting the implications of the traditional life-cycle/permanent income hypothesis. For services the inclusion of dispersion in addition to the mean of the income mdistribution improves the goodness-of-fit of the model.
Description: Paper presented at the Sixteenth Annual Conference of the Irish Economic Association
ISSN: 00129984
Appears in Collections:Economic and Social Review Archive: Complete Collection 1969-
The Economic and Social Review, Vol. 33, No. 3, Winter, 2002

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