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A Microeconometric Model of Intertemporal Substitution and Consumer Demand

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  • Blundell, Richard
  • Browning, Martin
  • Meghir, Costas

Abstract

In this paper we investigate the relationship between within-period preferences and the degree of intertemporal substitution. We first present a theoretical discussion which argues that the form of within-period preferences and the way these differ across consumers may have important consequences for the formulation and specification of intertemporal models. We then apply this methodology to a detailed study of disaggregate household expenditure patterns using a pooled cross-section of some 70,000 households across 15 years. Our objective is to assess the degree of intertemporal substitution across different household types avoiding aggregation bias and accounting for nonadditive within-period preferences and nonlinearity in Engel curves.

Suggested Citation

  • Blundell, Richard & Browning, Martin & Meghir, Costas, 1989. "A Microeconometric Model of Intertemporal Substitution and Consumer Demand," Economic Research Papers 268358, University of Warwick - Department of Economics.
  • Handle: RePEc:ags:uwarer:268358
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    Cited by:

    1. Laisney, François & Pohlmeier, Winfried & Staat, Matthias, 1991. "Estimation of labour supply functions using panel data: a survey," ZEW Discussion Papers 91-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. 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.
    3. Attanasio, Orazio P & Browning, Martin, 1995. "Consumption over the Life Cycle and over the Business Cycle," American Economic Review, American Economic Association, vol. 85(5), pages 1118-1137, December.
    4. Attanasio, O.P. & Weber, G., 1989. "Consumption, Productivity Growth And The Interest Rate," Papers 8925, Tilburg - Center for Economic Research.
    5. Carl Emmerson & Howard Reed & Andrew Shephard, 2004. "An assessment of PenSim2," IFS Working Papers W04/21, Institute for Fiscal Studies.
    6. Orazio P. Attanasio & Martin Browning, 1994. "Testing the life cycle model consumption: what can we learn from micro and macro data?," Investigaciones Economicas, Fundación SEPI, vol. 18(3), pages 433-463, September.
    7. Beblavý, Miroslav & Thum, Anna-Elisabeth & Potjagailo, Galina, 2013. "When do adults learn? A cohort analysis of adult education in Europe," CEPS Papers 8059, Centre for European Policy Studies.

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