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Life‐Cycle Consumption under Rational Expectations: Some Australian Evidence

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  • PAUL JOHNSON

Abstract

Using Australian data, this note tests the srochastic implications of Hall's (1978) national‐expectations life‐cycle consumption model. The strong version of the hypothesis can only be rejected using lagged values of the change in the unemployment rate and a particular measure of disposable income.

Suggested Citation

  • Paul Johnson, 1983. "Life‐Cycle Consumption under Rational Expectations: Some Australian Evidence," The Economic Record, The Economic Society of Australia, vol. 59(4), pages 345-350, December.
    • Handle: RePEc:bla:ecorec:v:59:y:1983:i:4:p:345-350
    DOI: 10.1111/j.1475-4932.1983.tb00824.x
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    References listed on IDEAS

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    1. Sargent, Thomas J, 1981. "Interpreting Economic Time Series," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 213-248, April.
    2. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    3. John F. O. Bilson, 1981. "The Rational Expectations Approach to the Consumption Function: A Multi-country Study," NBER Chapters, in: International Seminar on Macroeconomics 1979, pages 273-299, National Bureau of Economic Research, Inc.
    4. John Helliwell & Peter Boxall, 1978. "Private Sector Wealth: Quarterly Estimates for use in an Aggregate Model," The Economic Record, The Economic Society of Australia, vol. 54(1), pages 45-64, April.
    5. Brunner, Karl & Meltzer, Allan H., 1976. "The Phillips curve," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 1-18, January.
    6. Daly, Vince & Hadjimatheou, George, 1981. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Evidence for the U. K. Economy: Comment," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 596-599, June.
    7. Blanchard, Olivier J, 1981. "What Is Left of the Multiplier Accelerator?," American Economic Review, American Economic Association, vol. 71(2), pages 150-154, May.
    8. Flavin, Marjorie A, 1981. "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 974-1009, October.
    9. Helliwell, John F & Boxall, Peter, 1978. "Private Sector Wealth: Qtrly Estimates for Use in an Aggregate Model," The Economic Record, The Economic Society of Australia, vol. 54(145), pages 45-64, April.
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    Cited by:

    1. Robert Gausden & Ian Alan Whitfield, 2000. "Testing the stochastic implications of the life cycle-permanent income hypothesis using UK regional time-series data," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1299-1310.
    2. Luigi Ermini, 1993. "Shock Persistence and Stochastic Trends in Australian Aggregate Output and Consumption," The Economic Record, The Economic Society of Australia, vol. 69(1), pages 34-43, March.
    3. Tolar, Martin Michael, 1997. "A behavioral model of nondurable consumption expenditure," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(3), pages 291-302.

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