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International Evidence on Sticky Consumption Growth

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  • Christopher D. Carroll
  • Jiri Slacalek
  • Martin Sommer

Abstract

We estimate 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 Campbell and Mankiw (1989) model. In several countries, the sticky-consumption-growth and Campbell-Mankiw models work about equally well.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13876.

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Date of creation: Mar 2008
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Publication status: published as Christopher D. Carroll & Jiri Slacalek & Martin Sommer, 2011. "International Evidence on Sticky Consumption Growth," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1135-1145, 06.
Handle: RePEc:nbr:nberwo:13876

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Cited by:
  1. Schubert, Stefan Franz, 2009. "Dynamic Effects of Oil Price Shocks and their Impact on the Current Account," MPRA Paper, University Library of Munich, Germany 16738, University Library of Munich, Germany.
  2. 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.
  3. Jon Faust & Abhishek Gupta, 2012. "Posterior Predictive Analysis for Evaluating DSGE Models," NBER Working Papers, National Bureau of Economic Research, Inc 17906, National Bureau of Economic Research, Inc.
  4. Mackowiak, Bartosz Adam & Wiederholt, Mirko, 2010. "Business Cycle Dynamics under Rational Inattention," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7691, C.E.P.R. Discussion Papers.
  5. Jiri Slacalek, 2006. "International Wealth Effects," Computing in Economics and Finance 2006, Society for Computational Economics 425, Society for Computational Economics.
  6. 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.
  7. 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).
  8. Fuster, Andreas & Herbert, Benjamin & Laibson, David I., 2011. "Natural Expectations, Macroeconomic Dynamics, and Asset Pricing," Scholarly Articles, Harvard University Department of Economics 10140029, Harvard University Department of Economics.
  9. Peltonen, Tuomas A. & Sousa, Ricardo M. & Vansteenkiste, Isabel, 2009. "Wealth effects in emerging market economies," Working Paper Series, European Central Bank 1000, European Central Bank.
  10. 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.
  11. 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.
  12. Hall, Jamie, 2012. "Consumption dynamics in general equilibrium," MPRA Paper, University Library of Munich, Germany 43933, University Library of Munich, Germany.
  13. Ortiz, Marco, 2013. "Learning Through the Yield Curve," Working Papers, Banco Central de Reserva del Perú 2013-018, Banco Central de Reserva del Perú.
  14. 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.

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