IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Cross Country Evidence on Consumption Persistence

Author Info

  • Belbute, José
  • Caleiro, António

Abstract

The detection and measurement of the level of persistence on aggregate and disaggregate private consumption in Italy, Norway and United Kingdom is the main focus of the paper. Using a non-parametric methodology applied to annual data it is concluded that that one cannot reject the presence of a significant process of persistence in aggregate and disaggregate consumption in the three countries, even though each one displaying different levels of persistence. In particular, durables (furnishing and housing & utilities) display a lower degree of persistence when compared with non-durables. These results are imperative from a policy point of view as they may affect the effectiveness of countercyclical fiscal and monetary policies that are currently being implemented to overcome the current economic crisis. Persistence in consumption does exist and cannot be ignored, whether the goal is to stabilize the level of output via consumption or to burst output via long-lasting increases in consumption. Being the case that cultural differences are not easily changed, a possible instrument is the interest rate. Our results do show that a decrease in the interest rates, in order to boost investment, may also lead to non desirables results from the viewpoint of consumption, in particular for the durables categories

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://mpra.ub.uni-muenchen.de/22008/1/MPRA_paper_22008.pdf
File Function: original version
Download Restriction: no
File URL: https://mpra.ub.uni-muenchen.de/22890/3/MPRA_paper_22890.pdf
File Function: revised version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22008.

as
in new window

Length:
Date of creation: 09 Apr 2010
Date of revision:
Handle: RePEc:pra:mprapa:22008
Contact details of provider: Postal:
Ludwigstraße 33, D-80539 Munich, Germany

Phone: +49-(0)89-2180-2459
Fax: +49-(0)89-2180-992459
Web page: https://mpra.ub.uni-muenchen.de

More information through EDIRC

Keywords: Consumption; Persistence; Italy; Norway; United Kingdom.;

Find related papers by JEL classification:

  • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
  • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
  • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Guido Ascari, 2003. "Price/Wage Staggering and Persistence: A Unifying Framework," Journal of Economic Surveys, Wiley Blackwell, vol. 17(4), pages 511-540, 09.
  2. Tristan-Pierre Maury & Fabien Tripier, 2003. "Output persistence in human capital-based growth models," Economics Bulletin, AccessEcon, vol. 5(11), pages 1-8.
  3. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-36, July.
  4. Jhy-yuan Shieh & Ching-chong Lai & Wen-ya Chang, 2000. "Addictive behavior and endogenous growth," Journal of Economics, Springer, vol. 72(3), pages 263-273, October.
  5. repec:ebl:ecbull:v:4:y:2002:i:7:p:1-10 is not listed on IDEAS
  6. Alfred V. Guender, 2006. "Stabilising Properties of Discretionary Monetary Policies in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 116(508), pages 309-326, 01.
  7. Gartner, Manfred, 1996. "Political business cycles when real activity is persistent," Journal of Macroeconomics, Elsevier, vol. 18(4), pages 679-692.
  8. Belbute, José & Caleiro, António, 2009. "Measuring the Persistence on Consumption in Portugal," MPRA Paper 15116, University Library of Munich, Germany.
  9. Carlos Robalo Marques, 2005. "Inflation persistence: facts or artefacts?," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  10. Caleiro, António, 2009. "How upside down are political business cycles when there is output persistence," Research in Economics, Elsevier, vol. 63(1), pages 22-26, March.
  11. Cogley, Timothy & Nason, James M, 1995. "Output Dynamics in Real-Business-Cycle Models," American Economic Review, American Economic Association, vol. 85(3), pages 492-511, June.
  12. Daniel Dias & Carlos Robalo Marques, 2005. "Using Mean Reversion as a Measure of Persistence," Working Papers w200503, Banco de Portugal, Economics and Research Department.
  13. repec:ebl:ecbull:v:5:y:2003:i:11:p:1-8 is not listed on IDEAS
  14. Michael T. Kiley, 1996. "Endogenous price stickiness and business cycle persistence," Finance and Economics Discussion Series 96-23, Board of Governors of the Federal Reserve System (U.S.).
  15. Ronald Wendner, 2002. "Capital Accumulation and Habit Formation," Economics Bulletin, AccessEcon, vol. 4(7), pages 1-10.
  16. Gartner, Manfred, 1999. "The election cycle in the inflation bias: evidence from the G-7 countries," European Journal of Political Economy, Elsevier, vol. 15(4), pages 705-725, November.
  17. Pengfei Wang & Yi Wen, 2005. "Another look at sticky prices and output persistence," Working Papers 2005-051, Federal Reserve Bank of St. Louis.
  18. Christopher D. Carroll & Jody Overland & David N. Weil, 1995. "Saving and growth with habit formation," Finance and Economics Discussion Series 95-42, Board of Governors of the Federal Reserve System (U.S.).
  19. Clemente, Jesus & Montanes, Antonio & Reyes, Marcelo, 1998. "Testing for a unit root in variables with a double change in the mean," Economics Letters, Elsevier, vol. 59(2), pages 175-182, May.
  20. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-43, June.
  21. Christopher D. Carroll & Jody Overland & David N. Weil, 1997. "Comparison Utility in a Growth Model," NBER Working Papers 6138, National Bureau of Economic Research, Inc.
  22. Giugale, Marcelo & Korobow, Adam, 2000. "Shock persistence and the choice of foreign exchange regime - an empirical note from Mexico," Policy Research Working Paper Series 2371, The World Bank.
  23. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
  24. Takashi Kano & Hafedh Bouakez, 2005. "Learning-by-Doing or Habit Formation?," 2005 Meeting Papers 513, Society for Economic Dynamics.
  25. Jonsson, Gunnar, 1997. "Monetary politics and unemployment persistence," Journal of Monetary Economics, Elsevier, vol. 39(2), pages 303-325, July.
  26. Lockwood, Ben, 1997. "State-Contingent Inflation Contracts and Unemployment Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 286-99, August.
  27. Julio Rotemberg & Michael Woodford, 1997. "An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 297-361 National Bureau of Economic Research, Inc.
  28. Jos� BELBUTE & Ant�nio CALEIRO, 2009. "Measuring Persistence On Consumption In Portugal," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(2(8)_ Sum).
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as in new window


Cited by:

  1. Francesca Marino, 2013. "The Italian productivity slowdown in a Real Business Cycle perspective," SERIES 0046, Dipartimento di Scienze economiche e metodi matematici - Università di Bari, revised Apr 2013.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:22008. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.