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Aggregate Consumer's Expenditure and Income

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Author Info
Alois Kneip
Werner Hildenbrand
Abstract

The following question is analyzed: under what circumstances can one a stable (i.e., time invariant) functional relationship which links aggregate consumption in period t with aggregate income in period t and another "determinants" of consumtion that refer to periods prior to period t and can be derived from observable distributions of households' characteristics ? The basic hypothesis on which our model is built is the hypothes of a "structurally stable" evolution. This hypothesis has good empirical support. The proposed dynamic model of consumer's expenditure implies implies the observed regularities of aggregate consumption and income data such as the high linear association of aggregate income and consumption for short-run time series. The compatibility of our model with empirical data and its predictive power is discussed using time- series of cross-section data, the U.K. Family Expenditure Survey from 1968 to 84.

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Publisher Info
Paper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 456.

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Length: 40 pages plus pictures
Date of creation: Oct 1994
Date of revision:
Handle: RePEc:bon:bonsfa:456

Note: This paper consists of two parts, the first is the written part and the second are the graphs which belong to the written part and without which the written part is not understandable. The graph part ist available under the URL ftp://hannibal.econ3.uni-bonn.de/sfb- papers/with2/sfb_a456/ It will be needed a free space of approx. 20 MByte on the harddisk. If there occur any problems please don't hesitate to contact us via e-mail with2@track.or.uni-bonn.de .
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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 9221
Web page: http://www.bgse.uni-bonn.de/index.php?id=517

For technical questions regarding this item, or to correct its listing, contact: (Daniel Park).

Related research
Keywords: Aggregation; consumption function; structural stability; prediction;

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Find related papers by JEL classification:
B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
  2. Hardle, W. & Jerison, M., 1990. "Cross section Engel curves over time," CORE Discussion Papers 1990016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    Other versions:
  3. Maddison, A., 1991. "A Long Run Perspective on Saving," Papers 443, Groningen State, Institute of Economic Research-.
    Other versions:
  4. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July. [Downloadable!] (restricted)
  5. Simon Kuznets, 1942. "Uses of National Income in Peace and War," NBER Books, National Bureau of Economic Research, Inc, number kuzn42-1.
    Other versions:
  6. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-92, December. [Downloadable!] (restricted)
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