IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/308.html
   My bibliography  Save this paper

Are Predicted Lifetime Consumption Profiles Robust with respect to Model Specifications?

Author

Listed:

Abstract

Structural models of lifetime labour supply and consumption require functional specifications of preferences as well as other assumptions that can be difficult to assess a priori. Misspecifications of the model might lead to biases in the estimates of preferences, that may influence the simulation results obtained from the model. In this paper we study to what extent predicted distributions of lifetime consumption are robust with respect to the specification of preferences. The simulation results show that simulated distributions of lifetime consumption strongly depend on the estimate of the intertemporal substitution rate as well as on the estimate of the time preference rate relative to the marginal interest rate net of taxes.

Suggested Citation

  • Tom Kornstad, 2001. "Are Predicted Lifetime Consumption Profiles Robust with respect to Model Specifications?," Discussion Papers 308, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:308
    as

    Download full text from publisher

    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp308.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Zeldes, Stephen P, 1989. "Consumption and Liquidity Constraints: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 305-346, April.
    2. Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
    3. MaCurdy, Thomas E, 1983. "A Simple Scheme for Estimating an Intertemporal Model of Labor Supply and Consumption in the Presence of Taxes and Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(2), pages 265-289, June.
    4. Hubbard, R Glenn & Judd, Kenneth L, 1987. "Social Security and Individual Welfare: Precautionary Saving, Borrowing Constraints, and the Payroll Tax," American Economic Review, American Economic Association, vol. 77(4), pages 630-646, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Lifetime preferences; life cycle consumption; testing modelspesifications; empirical models.;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:308. 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: (L Maasø). General contact details of provider: http://edirc.repec.org/data/ssbgvno.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.