Business cycle fluctuations and excess sensitivity of private consumption
We investigate whether business cycle fluctuations affect the degree of excess sensitivity of private consumption growth to disposable income growth. Using multivariate state space methods and quarterly US data for the period 1965-2000 we find that excess sensitivity is significantly higher during recessions.
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"Individual Income, Incomplete Information, and Aggregate Consumption,"
93-16, Massachusetts Institute of Technology (MIT), Department of Economics.
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