Advanced Search
MyIDEAS: Login to save this article or follow this journal

Reconciling Consumer Confidence and Permanent Income Consumption

Contents:

Author Info

  • K. H. McIntyre

    ()
    (McDaniel College)

Registered author(s):

    Abstract

    The forecasting power of consumer confidence indexes for consumption spending runs counter to the predictions of the permanent income hypothesis (PIH). This paper resolves this discrepancy by developing a “confidence augmented” permanent income hypothesis (CAPIH). While it does not radically alter the estimated extent of permanent income consumption, the CAPIH model predicts a significantly smaller intertemporal elasticity of substitution than a standard PIH model. In addition, the results are largely invariant to the measure of consumer confidence used and the choice of instrumental variables.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume33/V33N2P257_275.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 33 (2007)
    Issue (Month): 2 (Spring)
    Pages: 257-275

    as in new window
    Handle: RePEc:eej:eeconj:v:33:y:2007:i:2:p:257-275

    Contact details of provider:
    Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
    Phone: (201) 684-7346
    Email:
    Web page: http://www.ramapo.edu/eea/journal.html
    More information through EDIRC

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Baxter, Marianne, 1996. "Are Consumer Durables Important for Business Cycles?," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 147-55, February.
    2. Acemoglu, Daron & Scott, Andrew, 1994. "Consumer Confidence and Rational Expectations: Are Agents' Beliefs Consistent with the Theory?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(422), pages 1-19, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Giancarlo Bruno, 2014. "Consumer confidence and consumption forecast: a non-parametric approach," Empirica, Springer, Springer, vol. 41(1), pages 37-52, February.
    2. Bahram Adrangi & Joseph Macri, 2011. "Consumer Confidence and Aggregate Consumption Expenditures in the United States," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 1-18, February.
    3. Douglas Lamdin, 2008. "Does Consumer Sentiment Foretell Revolving Credit Use?," Journal of Family and Economic Issues, Springer, Springer, vol. 29(2), pages 279-288, June.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:33:y:2007:i:2:p:257-275. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.