On the distributional effects of income in an aggregate consumption relation
AbstractIn this paper we analyse the influence of characteristics of the income distribution in modelling aggregate consumption expenditure. We model the aggregate consumption relation of a heterogeneous population, using a statistical distributional approach of aggregation, and apply it to UK-Family Expenditure Survey data. A bootstrap test based on a non-parametric estimation methodology, which accounts for the presence of continuous and discrete variables, suggests that the mean and the dispersion of the income distribution significantly influence aggregate consumption expenditure. Also, the parameters of the aggregate relation are time varying. These findings have implications for constructing empirically sound models of aggregate consumption expenditure.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 39 (2006)
Issue (Month): 4 (November)
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Other versions of this item:
- Manisha Chakrabarty & Anke Schmalenbach & Jeffrey Racine, 2004. "On the Distributional Effects of Income in an Aggregate Consumption Relation," Keele Economics Research Papers KERP 2004/09, Centre for Economic Research, Keele University.
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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- Michal Paluch & Alois Kneip & Werner Hildenbrand, 2007. "Individual versus Aggregate Income Elasticities for Heterogeneous Populations," Bonn Econ Discussion Papers bgse13_2007, University of Bonn, Germany.
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