MacDonald, R. and Molana, H. (2004) Can portfolio adjustments explain deviations of consumption from permanent income? An empirical study of UK data. North American Journal of Economics and Finance, 15(3), pp. 313-331. (doi: 10.1016/j.najef.2004.10.001)
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Publisher's URL: http://dx.doi.org/10.1016/j.najef.2004.10.001
Abstract
It has become something of a stylized fact that the change in consumer spending exhibits persistence. This is often interpreted as indicating a violation of the rational expectations-permanent income (RE-PI) hypothesis. This paper considers an alternative interpretation: the observed persistence could be due to portfolio adjustments which push consumption away from its RE-PI path. Empirical support for this interpretation is provided using a UK data set.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | MacDonald, Professor Ronald and Molana, Prof Hassan |
| Authors: | MacDonald, R., and Molana, H. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | North American Journal of Economics and Finance |
| Journal Abbr.: | N. Am. J. Econ. Finance |
| ISSN: | 1062-9408 |
| Published Online: | 25 November 2004 |
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