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Subjective Income Expectations, Canonical Models and Income Risk

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Author Info

  • Xavi Ramos

    ()
    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Christian Schluter

    ()
    (Department of Economics, University of Southampton)

Abstract

Expectations are central to behaviour. Despite the existence of subjective expectations data, the standard approach is to ignore these, to hypothecate a model of behaviour and to infer expectations from realisations. In the context of income models, we reveal the informational gain obtained from using both a canonical model and subjective expectations data. We propose a test for this informational gain, and illustrate our approach with an application to the problem of measuring income risk.

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File URL: http://www.ecap.uab.es/RePEc/doc/wpdea0310.pdf
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Bibliographic Info

Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea0310.

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Length: 22 pages
Date of creation: Dec 2003
Date of revision:
Handle: RePEc:uab:wprdea:wpdea0310

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Keywords: subjective expectation data; canonical income models; income risk.;

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References

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  1. Dominitz, Jeff, 2001. "Estimation of income expectations models using expectations and realization data," Journal of Econometrics, Elsevier, vol. 102(2), pages 165-195, June.
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  17. Baker, Michael, 1997. "Growth-Rate Heterogeneity and the Covariance Structure of Life-Cycle Earnings," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 338-75, April.
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Cited by:
  1. Joan Pasqual & Emilio Padilla, 2006. "Environmental Management Problems, Future Generations And Social Decisions," The IUP Journal of Public Finance, IUP Publications, vol. 0(3), pages 15-59, August.
  2. Juan Antonio Duro, 2004. "Análisis de agrupaciones provinciales a partir del enfoque de desigualdad y polarización: una nota," Working Papers wpdea0402, Department of Applied Economics at Universitat Autonoma of Barcelona.

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