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Testing the cross-section implications of Friedman's permanent income hypothesis

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  • DeJuan, Joseph P.
  • Seater, John J.

Abstract

We use modern household data and econometric methods to conduct some of the original tests of the Permanent Income Hypothesis (PIH) suggested and used by Friedman (1957). The data and methods are superior to those available to Friedman, allowing us to refine Friedman’s tests and perform tests he could not do. The results provide overall but not universal support for PIH.
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  • DeJuan, Joseph P. & Seater, John J., 2007. "Testing the cross-section implications of Friedman's permanent income hypothesis," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 820-849, April.
  • Handle: RePEc:eee:moneco:v:54:y:2007:i:3:p:820-849
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    1. On Why It is Important to Distinguish Between Consumption and Expenditures When Testing the Permanent Income Hypothesis
      by Josh in The Everyday Economist on 2017-01-14 01:23:10

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    4. E. Pastrapa & C. Apostolopoulos, 2015. "Estimating Determinants of Borrowing: Evidence from Greece," Journal of Family and Economic Issues, Springer, vol. 36(2), pages 210-223, June.

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