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International Evidence on Sticky Consumption Growth

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  • Christopher D. Carroll

    (Johns Hopkins University)

  • Jiri Slacalek

    (European Central Bank)

  • Martin Sommer

    (International Monetary Fund)

Abstract

This paper estimates the degree of stickiness in aggregate consumption growth (sometimes interpreted as reflecting consumption habits) for thirteen advanced economies. We find that after controlling for measurement error, consumption growth has a high degree of autocorrelation, with a stickiness parameter of about 0.7 on average across countries. The sticky consumption growth model outperforms the random walk model of Hall (1978) and typically fits the data better than the popular Mankiw (1989) model, though in a few countries, the sticky consumption growth and Campbell-Mankiw models work about equally well. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 4 (November)
Pages: 1135-1145

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Handle: RePEc:tpr:restat:v:93:y:2011:i:4:p:1135-1145

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Cited by:
  1. Tuomas A. Peltonen & Ricardo M. Sousa & Isabel S. Vansteenkiste, 2009. "Wealth Effects in Emerging Market Economies," NIPE Working Papers, NIPE - Universidade do Minho 4/2009, NIPE - Universidade do Minho.
  2. Schubert, Stefan Franz, 2009. "Dynamic Effects of Oil Price Shocks and their Impact on the Current Account," MPRA Paper 16738, University Library of Munich, Germany.
  3. Liping Gao & Hyeongwoo Kim & Yaoqi Zhang, 2013. "Revisiting the Empirical Inconsistency of the Permanent Income Hypothesis: Evidence from Rural China," Auburn Economics Working Paper Series, Department of Economics, Auburn University auwp2013-05, Department of Economics, Auburn University.
  4. Carroll, Christopher D. & Slacalek, Jirka, 2009. "The American consumer: Reforming, or just resting?," CFS Working Paper Series, Center for Financial Studies (CFS) 2009/12, Center for Financial Studies (CFS).
  5. Fuster, Andreas & Herbert, Benjamin & Laibson, David I., 2011. "Natural Expectations, Macroeconomic Dynamics, and Asset Pricing," Scholarly Articles 10140029, Harvard University Department of Economics.
  6. Saten Kumar & Barrett Owen, 2013. "Financial Crisis and Sticky Expectations," Working Papers, Auckland University of Technology, Department of Economics 2013-05, Auckland University of Technology, Department of Economics.
  7. Jiri Slacalek, 2006. "International Wealth Effects," Discussion Papers of DIW Berlin, DIW Berlin, German Institute for Economic Research 596, DIW Berlin, German Institute for Economic Research.
  8. Maćkowiak, Bartosz & Wiederholt, Mirko, 2011. "Business cycle dynamics under rational inattention," Working Paper Series, European Central Bank 1331, European Central Bank.
  9. Jon Faust & Abhishek Gupta, 2012. "Posterior Predictive Analysis for Evaluating DSGE Models," NBER Working Papers 17906, National Bureau of Economic Research, Inc.
  10. Ortiz, Marco, 2013. "Learning Through the Yield Curve," Working Papers, Banco Central de Reserva del Perú 2013-018, Banco Central de Reserva del Perú.
  11. Jonathan A. Parker & Nicholas S. Souleles & Christopher D. Carroll, 2014. "The Benefits of Panel Data in Consumer Expenditure Surveys," NBER Chapters, National Bureau of Economic Research, Inc, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  12. Hall, Jamie, 2012. "Consumption dynamics in general equilibrium," MPRA Paper 43933, University Library of Munich, Germany.
  13. Liu, Yaqin & Ferreira, Susana & Colson, Gregory & Wetzstein, Michael, 2013. "Obesity and Counseling," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 149947, Agricultural and Applied Economics Association.
  14. Georg Fahrenschon & Clemens Fuest & Ralph Brügelmann & Willi Diez, 2009. "Konsumgutscheine, Steuer- und Zinssenkungen, Hilfspaket für die Automobilbranche: Sind das geeignete Mittel gegen die Rezession?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 62(01), pages 03-15, 01.

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