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Economic Development, Life-Cycle Consumption, And Planning Horizon

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Author Info
JOHN BAFFOE-BONNIE
MOHAMMED KHAYUM

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Abstract

This article presents estimates of consumer planning horizons for countries at different levels of economic development. Within an intertemporal optimization framework a direct relationship is observed between the length of consumers' planning horizons and the level of economic development. In particular, consumption behavior in a sample of developed economies reflect longer planning horizons than in the sample of less developed economies. The average planning horizon for a group of less developed economies is about 7 months, while it is 1.6 and 3.8 years for middle and high income economies, respectively. [E21, O50]

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Publisher Info
Article provided by Korean International Economic Association in its journal International Economic Journal.

Volume (Year): 11 (1997)
Issue (Month): 4 (December)
Pages: 17-37
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Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:17-37

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  4. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-87, December. [Downloadable!] (restricted)
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  6. Haug, Alfred A., 1991. "The random walk hypothesis of consumption and time aggregation," Journal of Macroeconomics, Elsevier, vol. 13(4), pages 691-700. [Downloadable!] (restricted)
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