Evaluating how predictable errors in expected income affect consumption
AbstractThis article studies whether anomalies in consumption can be explained by a behavioural model in which agents make predictable errors in forecasting income. We use a micro-data set containing subjective expectations about future income. This article shows that the null hypothesis of rational expectations is rejected in favour of the behavioural model, since consumption responds to predictable forecast errors. On average, agents who we predict are too pessimistic increase consumption after the predictable positive income shock. On average, agents who are too optimistic reduce the consumption.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 45 (2013)
Issue (Month): 28 (October)
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Other versions of this item:
- Giamboni, Luigi & Millemaci, Emanuele & Waldmann, Robert, 2007. "Evaluating how predictable errors in expected income affect consumption," MPRA Paper 12939, University Library of Munich, Germany.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- I am storing pdf's at google sites so you can see my research
by Robert in Robert's Stochastic Thoughts on 2009-03-16 11:09:00
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