Testing the permanent income hypothesis in the developing and developed countries: A comparison between Fiji and Australia
AbstractHall (1978) has stimulated considerable controversy and empirical work on testing the permanent income hypothesis (PIH). Much of the empirical work is on the developed countries where opportunities for inter-temporal substitution are generally higher than in the developing countries. Therefore, it is expected that PIH would be valid for only a smaller proportion of consumers in the developing countries. This paper uses the extended framework of Campbell and Mankiw (1989) to estimate the proportion of consumers for whom PIH is valid in Fiji and Australia. Our results show that PIH consumers are about 40\% higher in Australia than in Fiji.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2725.
Date of creation: 14 Apr 2007
Date of revision:
Consumption function; Developing countries; Permanent income hypothesis; Hall’s random walk hypothesis; Campbell-Mankiw tests;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- E29 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Other
This paper has been announced in the following NEP Reports:
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.:
- 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.
- Ronald MacDonald & Tamim Bayoumi, 1994.
"Consumption, Income, and International Capital Market Integration,"
IMF Working Papers
94/120, International Monetary Fund.
- Tamim Bayoumi & Ronald Macdonald, 1995. "Consumption, Income, and International Capital Market Integration," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 552-576, September.
- Bayoumi, Tamim, 1994. "Consumption, Income, and International Capital Market Integration," CEPR Discussion Papers 1028, C.E.P.R. Discussion Papers.
- Masao Ogaki & Carmen M. Reinhart, 1998.
"Measuring Intertemporal Substitution: The Role of Durable Goods,"
Journal of Political Economy,
University of Chicago Press, vol. 106(5), pages 1078-1098, October.
- Reinhart, Carmen & Ogaki, Masao, 1995. "Measuring intertemporal substitution: The role of durable goods," MPRA Paper 13690, University Library of Munich, Germany.
- Ogaki, M & Reinhart, C-M, 1995. "Measuring Intertemporal Substitution : The Role of Durable Goods," RCER Working Papers 404, University of Rochester - Center for Economic Research (RCER).
- Masasaki Fuse, 2004. "Estimating intertemporal substitution in Japan," Applied Economics Letters, Taylor & Francis Journals, vol. 11(4), pages 267-269.
- Hansen, Lars Peter & Singleton, Kenneth J, 1996.
"Efficient Estimation of Linear Asset-Pricing Models with Moving Average Errors,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 14(1), pages 53-68, January.
- Lars Peter Hansen & Kenneth J. Singleton, 1997. "Efficient Estimation of Linear Asset Pricing Models with Moving-Average Errors," NBER Technical Working Papers 0086, National Bureau of Economic Research, Inc.
- Attanasio, Orazio P & Weber, Guglielmo, 1993. "Consumption Growth, the Interest Rate and Aggregation," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 631-49, July.
- Nagayasu, Jun, 2012.
"The threshold consumption correlation-based approach to international capital mobility: Evidence from advanced and developing countries,"
Structural Change and Economic Dynamics,
Elsevier, vol. 23(3), pages 256-263.
- Nagayasu, Jun, 2012. "The threshold consumption correlation-based approach to international capital mobility: evidence from advanced and developing countries," MPRA Paper 36215, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.