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Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey

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  • Attanasio, Orazio P
  • Weber, Guglielmo

Abstract

In this paper, the authors show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in U.S. household-level data. They propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations. The authors estimate preference parameters using the only U.S. micro data set with complete consumption information. They show that previous rejections can be explained by the simplifying assumptions made in previous studies. The authors also show that results obtained using good consumption or aggregate data can be misleading. Copyright 1995 by University of Chicago Press.

Suggested Citation

  • Attanasio, Orazio P & Weber, Guglielmo, 1995. "Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1121-1157, December.
  • Handle: RePEc:ucp:jpolec:v:103:y:1995:i:6:p:1121-57
    DOI: 10.1086/601443
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    More about this item

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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