A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States

DeJuan, Joseph P.; Seater, John J.; Wirjanto, Tony S.

Not Available for Download

Add Paper to My Library

A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States

Journal of Money, Credit and Banking, Vol. 36, No. 6, pp. 1091-1103, December 2004

Posted: 31 Mar 2013

See all articles by Joseph P. DeJuan

Joseph P. DeJuan

University of Waterloo - Department of Economics

Tony S. Wirjanto

University of Waterloo, Department of Statistics & Actuarial Science; University of Waterloo - School of Accounting and Finance

Date Written: December 1, 2004

Abstract

This paper tests the prediction of the Permanent Income Hypothesis (PIH) that news about future income induce a revision in consumption equal to the revision in permanent income. We use time-series data from 48 contiguous US states to perform the test. The empirical results provide some support for the PIH across states.

Keywords: Permanent income, Consumption, US states

JEL Classification: E21

Suggested Citation: Suggested Citation

DeJuan, Joseph P. and Seater, John J. and Wirjanto, Tony S., A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States (December 1, 2004). Journal of Money, Credit and Banking, Vol. 36, No. 6, pp. 1091-1103, December 2004 , Available at SSRN: https://ssrn.com/abstract=2241870