A note on the average propensity to consume, wealth and threshold adjustment
AbstractWe explore the connection between the average propensity to consume (APC) and wealth to income ratio (WY) in the US. We find evidence of a long-run relationship characterised by threshold error correction. It is the APC that responds to long-run disequilibrium where the speed of adjustment is asymmetric insofar as being most likely fastest in regimes characterised by a high APC and low WY.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 35 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/30411
Threshold error correction; Average propensity to consume; Wealth;
Find related papers by JEL classification:
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
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