This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
Household Production and the Excess Sensitivity of Consumption to Current Income Author info | Abstract | Publisher info | Download info | Related research | Statistics Marianne Baxter
Urban J. Jermann
Additional information is available for the following
registered author(s):
Empirical research on the permanent income hypothesis (PIH) has found that consumption growth is excessively sensitive to predictable changes in income. This finding is interpreted as strong evidence against the PIH. We propose an explanation for apparent excess sensitivity that is based on a quantitative equilibrium version of Becker's (1965) model of household production in which permanent income consumers respond to shifts in sectoral wages and prices by substituting work effort and consumption across home and market sectors. Although the PIH is true, this mechanism generates apparent excess sensitivity because market consumption responds to predictable income growth.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7046.
Download reference. The following formats are available: HTML ,
plain text ,
BibTeX ,
RIS (EndNote),
ReDIF
Length:
Date of creation: Mar 1999Date of revision:
Publication status: published as American Economic Review, Vol. 89, no. 5 (September 1999): 902-920.Handle: RePEc:nbr:nberwo:7046Note: EFGContact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A. Phone: 617-868-3900 Email: Web page: http://www.nber.org More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: ().
Keywords: Other versions of this item:
Find related papers by JEL classification: D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Caballero, Ricardo J., 1990.
"Consumption puzzles and precautionary savings ,"
Journal of Monetary Economics ,
Elsevier, vol. 25(1), pages 113-136, January.
[Downloadable!] (restricted)
Greenwood, J. & Hercowitz, Z., 1991.
"The Allocation of Capital and Time Over the Business Cycle ,"
RCER Working Papers
268, University of Rochester - Center for Economic Research (RCER).
Other versions:
Greenwood, J. & Hercowitz, Z., 1991.
"The Allocation of Capital and Time Over the Business Cycles ,"
UWO Department of Economics Working Papers
9104, University of Western Ontario, Department of Economics.
Greenwood, Jeremy & Hercowitz, Zvi, 1991.
"The Allocation of Capital and Time over the Business Cycle ,"
Journal of Political Economy ,
University of Chicago Press, vol. 99(6), pages 1188-214, December.
[Downloadable!] (restricted) Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991.
"Homework in Macroeconomics: Household Production and Aggregate Fluctuations ,"
Journal of Political Economy ,
University of Chicago Press, vol. 99(6), pages 1166-87, December.
[Downloadable!] (restricted)
Other versions: Juster, F Thomas & Stafford, Frank P, 1991.
"The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement ,"
Journal of Economic Literature ,
American Economic Association, vol. 29(2), pages 471-522, June.
[Downloadable!] (restricted)
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)
Other versions: Attanasio, Orazio P & Browning, Martin, 1995.
"Consumption over the Life Cycle and over the Business Cycle ,"
American Economic Review ,
American Economic Association, vol. 85(5), pages 1118-37, December.
[Downloadable!] (restricted)
Other versions: Baxter, Marianne, 1996.
"Are Consumer Durables Important for Business Cycles? ,"
The Review of Economics and Statistics ,
MIT Press, vol. 78(1), pages 147-55, February.
[Downloadable!] (restricted)
N. Gregory Mankiw, 1985.
"Consumer Durables and the Real Interest Rate ,"
NBER Working Papers
1148, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Nicholas S. Souleles, 1999.
"The Response of Household Consumption to Income Tax Refunds ,"
American Economic Review ,
American Economic Association, vol. 89(4), pages 947-958, September.
[Downloadable!] (restricted)
John Y. Campbell & N. Gregory Mankiw, 1990.
"Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence ,"
NBER Working Papers
2924, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Campbell, John Y & Mankiw, N Gregory, 1990.
"Permanent Income, Current Income, and Consumption ,"
Journal of Business & Economic Statistics ,
American Statistical Association, vol. 8(3), pages 265-79, July.
Other versions: John Y. Campbell & Sydney Ludvigson, 1997.
"Elasticities of substitution in real business cycle models with home production ,"
Research Paper
9733, Federal Reserve Bank of New York.
[Downloadable!]
Other versions:
John Y. Campbell & Sydney Ludvigson, 1998.
"Elasticities of Substitution in Real Business Cycle Models with Home Production ,"
NBER Working Papers
6763, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) John Y. Campbell & Sydney Ludvigson, 2000.
"Elasticities of Substitution in Real Business Cycle Models with Home Production ,"
Harvard Institute of Economic Research Working Papers
1900, Harvard - Institute of Economic Research.
[Downloadable!] Campbell, John Y & Ludvigson, Sydney, 2001.
"Elasticities of Substitution in Real Business Cycle Models with Home Protection ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 33(4), pages 847-75, November.
Feldstein, Martin & Dicks-Mireaux, Louis & Poterba, James, 1983.
"The effective tax rate and the pretax rate of return ,"
Journal of Public Economics ,
Elsevier, vol. 21(2), pages 129-158, July.
[Downloadable!] (restricted)
Other versions: Shapiro, Matthew D & Slemrod, Joel, 1995.
"Consumer Response to the Timing of Income: Evidence from a Change in Tax Withholding ,"
American Economic Review ,
American Economic Association, vol. 85(1), pages 274-83, March.
[Downloadable!] (restricted)
Other versions: Baxter, Marianne & Crucini, Mario J, 1993.
"Explaining Saving-Investment Correlations ,"
American Economic Review ,
American Economic Association, vol. 83(3), pages 416-36, June.
[Downloadable!] (restricted)
Other versions: Rogerson, Richard, 1988.
"Indivisible labor, lotteries and equilibrium ,"
Journal of Monetary Economics ,
Elsevier, vol. 21(1), pages 3-16, January.
[Downloadable!] (restricted)
Rupert, Peter & Rogerson, Richard & Wright, Randall, 1995.
"Estimating Substitution Elasticities in Household Production Models ,"
Economic Theory ,
Springer, vol. 6(1), pages 179-93, June.
Other versions: repec:fth:harver:1435 is not listed on IDEAS
Peter M. Garber & Robert G. King, 1983.
"Deep Structral Excavation? A Critique of Euler Equation Methods ,"
NBER Technical Working Papers
0031, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Canova, Fabio & Ubide, Angel J., 1998.
"International business cycles, financial markets and household production ,"
Journal of Economic Dynamics and Control ,
Elsevier, vol. 22(4), pages 545-572, April.
[Downloadable!] (restricted)
Other versions: Rios-Rull, Jose-Victor, 1993.
"Working in the Market, Working at Home, and the Acquisition of Skills: A General-Equilibrium Approach ,"
American Economic Review ,
American Economic Association, vol. 83(4), pages 893-907, September.
[Downloadable!] (restricted)
Charles R. Nelson & Richard Startz, 1988.
"Some Further Results on the Exact Small Sample Properties of the Instrumental Variable Estimator ,"
NBER Technical Working Papers
0068, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Nelson, C. & Startz, R., 1988.
"Some Furthere Results On The Exact Small Sample Properties Of The Instrumental Variable Estimator ,"
Working Papers
88-06, University of Washington, Department of Economics.
Nelson, C. & Startz, R., 1988.
"Some Furthere Results On The Exact Small Sample Properties Of The Instrumental Variable Estimator ,"
Discussion Papers in Economics at the University of Washington
88-06, Department of Economics at the University of Washington.
Nelson, Charles R & Startz, Richard, 1990.
"Some Further Results on the Exact Small Sample Properties of the Instrumental Variable Estimator ,"
Econometrica ,
Econometric Society, vol. 58(4), pages 967-76, July.
[Downloadable!] (restricted) Eichenbaum, Martin & Hansen, Lars Peter, 1990.
"Estimating Models with Intertemporal Substitution Using Aggregate Time Series Data ,"
Journal of Business & Economic Statistics ,
American Statistical Association, vol. 8(1), pages 53-69, January.
Other versions: McGrattan, Ellen R & Rogerson, Richard & Wright, Randall, 1997.
"An Equilibrium Model of the Business Cycle with Household Production and Fiscal Policy ,"
International Economic Review ,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 267-90, May.
Other versions: Flavin, Marjorie A, 1981.
"The Adjustment of Consumption to Changing Expectations about Future Income ,"
Journal of Political Economy ,
University of Chicago Press, vol. 89(5), pages 974-1009, October.
[Downloadable!] (restricted)
Christiano, Lawrence J & Eichenbaum, Martin & Marshall, David, 1991.
"The Permanent Income Hypothesis Revisited ,"
Econometrica ,
Econometric Society, vol. 59(2), pages 397-423, March.
[Downloadable!] (restricted)
Other versions:
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page .
Access and
download statistics Did you know? You too can volunteer with RePEc.
This page was last updated on 2008-11-16.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .