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Consumption function for Poland. Is life cycle hypothesis legitimate?

Author

Listed:
  • Katarzyna Leszkiewicz Kędzior

    (University of Lodz)

  • Władysław Welfe

    (University of Lodz)

Abstract

In industrialized countries the rising percentage of households behaves rationally. It is represented by the life cycle hypothesis of determining their incomes. This concept was taken into account in many macroeconometric multicountry models. The W models of the Polish economy assumed the number of such households is small and consequently this approach was neglected. The paper presents the results of a research aimed at empirical testing whether the share of “rational” households in Poland was small and their majority was income constrained. We calculated the expected life cycle income on the basis of information on the structure of employment by age. The empirical study was conducted using annual data for the years 1970−2008. The obtained results show that the share of “rational” households was below 10% in the long run. But in the short run they showed a tendency of increasing up the share to more than 20%.

Suggested Citation

  • Katarzyna Leszkiewicz Kędzior & Władysław Welfe, 2012. "Consumption function for Poland. Is life cycle hypothesis legitimate?," Bank i Kredyt, Narodowy Bank Polski, vol. 43(5).
    • Handle: RePEc:nbp:nbpbik:v:43:y:2012:i:5
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    References listed on IDEAS

    as
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    Cited by:

    1. Aleksandra Kolasa, 2012. "Life Cycle Income and Consumption Patterns in Transition," Working Papers 2012-17, Faculty of Economic Sciences, University of Warsaw.
    2. Aleksandra Kolasa, 2017. "Life Cycle Income and Consumption Patterns in Poland," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 9(2), pages 137-172, June.
    3. Elisabeth Beckmann & Mariya Hake & Jarmila Urvová, 2013. "Determinants of Households’ Savings in Central, Eastern and Southeastern Europe," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 8-29.

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    More about this item

    Keywords

    consumption function; life cycle hypothesis; households’ real disposable income; households’ wealth;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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