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Testing for intertemporal nonseparability

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  • Crawford, Ian
  • Polisson, Matthew

Abstract

This paper presents a nonparametric analysis of a common class of intertemporal models of consumer choice that relax consumption independence. Within this class and in the absence of any functional form restrictions on instantaneous preferences, we compare the revealed preference conditions for rational habit formation and rational anticipation. We show that these models are observationally equivalent in the presence of finite data sets composed of prices, interest rates, and consumption choices.

Suggested Citation

  • Crawford, Ian & Polisson, Matthew, 2014. "Testing for intertemporal nonseparability," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 46-49.
    • Handle: RePEc:eee:mateco:v:52:y:2014:i:c:p:46-49
    DOI: 10.1016/j.jmateco.2014.03.007
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    2. Peter Levell, 2014. "Revealed preference and consumption behaviour at retirement," IFS Working Papers W14/29, Institute for Fiscal Studies.

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    More about this item

    Keywords

    Anticipation; Habits; Revealed preference; Time separability;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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