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Testing the Permanent Income Hypothesis: The Evidence from Canadian Data

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  • Tony S. Wirjanto

Abstract

The paper investigates whether there are variants of the permanent income model which are consistent with quarterly, seasonally unadjusted post-war Canadian data. The model estimates about 20 percent of consumers follow the rule of thumb of consuming their current income. This suggests a large proportion of the population behaves in the way predicted by the permanent income hypothesis. This result is robust to a variety of data issues.

Suggested Citation

  • Tony S. Wirjanto, 1989. "Testing the Permanent Income Hypothesis: The Evidence from Canadian Data," Working Paper 755, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:755
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    Citations

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    Cited by:

    1. Brunila, Anne, 1997. "Current income and private consumption: Saving decisions: Testing the finite horizon model," Bank of Finland Research Discussion Papers 6/1997, Bank of Finland.
    2. Brunila, Anne, 1997. "Current income and private consumption : Saving decisions : Testing the finite horizon model," Research Discussion Papers 6/1997, Bank of Finland.
    3. Sena Durguner, 2018. "Variations in farm consumption and their relationship to income: an empirical investigation of Illinois farm households," Applied Economics, Taylor & Francis Journals, vol. 50(9), pages 990-1005, February.
    4. Tomas Havranek & Anna Sokolova, 2016. "Do Consumers Really Follow a Rule of Thumb? Three Thousand Estimates from 130 Studies Say "Probably Not"," Working Papers 2016/08, Czech National Bank.
    5. Tony Wirjanto, 1997. "Aggregate consumption behaviour with time-nonseparable preferences and liquidity constraints," Applied Financial Economics, Taylor & Francis Journals, vol. 7(1), pages 107-114.
    6. KARGI, Bilal, 2014. "Türkiye Ekonomisinde Sürekli Gelir Hipotezine İlişkin Kanıtlar: Zaman Serileri Analizi (2004-2012) [Evidence for Turkey's Economy Permanent Income Hypothesis: Time Series Analysis (2004-2012)]," MPRA Paper 55696, University Library of Munich, Germany.
    7. Julian Thimme, 2017. "Intertemporal Substitution In Consumption: A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 31(1), pages 226-257, February.
    8. Luis Zambrano Sequín & Matías Riutort & Rafael Muñoz & Juan Carlos Guevara, 1998. "El ahorro privado en Venezuela: Tendencias y determinantes," Research Department Publications 3021, Inter-American Development Bank, Research Department.
    9. repec:zbw:bofrdp:1997_006 is not listed on IDEAS
    10. Joseph P. Dejuan & John J. Seater & Tony S. Wirjanto, 2010. "Testing the Stochastic Implications of the Permanent Income Hypothesis Using Canadian Provincial Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(1), pages 89-108, February.

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