International Evidence on Sticky Consumption Growth

30 Pages Posted: 19 Mar 2008 Last revised: 4 Apr 2008

See all articles by Christopher D. Carroll

Christopher D. Carroll

Johns Hopkins University - Department of Economics; National Bureau of Economic Research (NBER)

Jiri Slacalek

European Central Bank (ECB)

Martin Sommer

International Monetary Fund (IMF) - Research Department

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Date Written: March 2008

Abstract

We estimate the degree of 'stickiness' in aggregate consumption growth (sometimes interpreted as reflecting consumption habits) for thirteen advanced economies. We find that, after controlling for measurement error, consumption growth has a high degree of autocorrelation, with a stickiness parameter of about 0.7 on average across countries. The sticky-consumption-growth model outperforms the random walk model of Hall (1978), and typically fits the data better than the popular Campbell and Mankiw (1989) model. In several countries, the sticky-consumption-growth and Campbell-Mankiw models work about equally well.

Suggested Citation

Carroll, Christopher D. and Slacalek, Jiri and Sommer, Martin, International Evidence on Sticky Consumption Growth (March 2008). NBER Working Paper No. w13876, Available at SSRN: https://ssrn.com/abstract=1106602

Christopher D. Carroll (Contact Author)

Johns Hopkins University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Jiri Slacalek

European Central Bank (ECB) ( email )

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Germany

Martin Sommer

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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