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The Adjustment of Consumption to Income Changes Across Chinese Provinces

Author

Listed:
  • Joseph DeJuan

    (Department of Economics, University of Waterloo)

  • Tony S. Wirjanto

    (School of Accounting & Finance and Department of Statistics & Actuarial Science, University of Waterloo)

  • Xinpeng Xu

    (School of Accounting and Finance, Faculty of Business, Hong Kong Polytechnic University)

Abstract

This paper examines a key stochastic implication of the canonical version of the permanent income model that new information about future income should give rise to an adjustment in consumption equal in magnitude to the adjustment in permanent income. Using data from 29 Chinese provinces, the empirical results are consistent with the model.

Suggested Citation

  • Joseph DeJuan & Tony S. Wirjanto & Xinpeng Xu, 2016. "The Adjustment of Consumption to Income Changes Across Chinese Provinces," Annals of Economics and Finance, Society for AEF, vol. 17(2), pages 235-253, November.
    • Handle: RePEc:cuf:journl:y:2016:v:17:i:2:dejuan
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    References listed on IDEAS

    as
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    Cited by:

    1. Samih A Azar, 2021. "Measuring the US marginal propensity to consume," Economics Bulletin, AccessEcon, vol. 41(2), pages 283-292.

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    More about this item

    Keywords

    Chinese provinces; Consumption; Permanent Income;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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