Explaining Consumption: A Simple Test of Alternative Hypotheses
IMF Working Paper No. 97/56
Posted: 22 May 1998
Date Written: 1997
A method of testing the relative importance for consumption of risk sharing behavior and changes in current income is proposed and estimated using data across Canadian provinces. The focus of the estimation is less on whether or not the risk sharing model can be rejected than on how much each of these hypotheses can contribute to explaining overall variation in consumption.
JEL Classification: D12, E21
Suggested Citation: Suggested Citation