Consumption and Aggregate Constraints: International Evidence
AbstractThis paper documents that region-level consumption exhibits excess sensitivity to lagged region-level income in Italy, Japan, Spain, the UK and West Germany. However, "region-specific" consumption exhibits substantially less sensitivity to lagged region-specific income. Moreover, excess sensitivity is inversely related to standard measures of openness and credit market integration and for most countries, it has decreased over time. These findings are consistent with the results reported by Ostergaard "et al." ["Journal of Political Economy" (2002) Vol. 110, pp. 634-645] for US states and Canadian provinces, and provide empirical support for the hypothesis that closed-economy constraints may partly be responsible for the excess sensitivity phenomenon in aggregate data. Copyright 2006 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics & Statistics.
Volume (Year): 68 (2006)
Issue (Month): 1 (02)
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Other versions of this item:
- Joseph DeJuan & Maria J. Luengo-Prado, 2005. "Consumption and Aggregate Constraints: International Evidence," Macroeconomics 0501018, EconWPA.
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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