IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v32y2000i10p1299-1310.html
   My bibliography  Save this article

Testing the stochastic implications of the life cycle-permanent income hypothesis using UK regional time-series data

Author

Listed:
  • Robert Gausden
  • Ian Alan Whitfield

Abstract

This paper applies exclusion tests of the pure life cycle—permanent income hypothesis (LCPIH) to time-series data on each of the eleven standard regions of the UK. Data are annual and extend from 1975 to 1994. The results obtained suggest that there are considerable differences in consumption behaviour across the regions. Theory has indicated that a departure of consumption behaviour from that predicted by the LCPIH can occur because of a change in unemployment. Consequently, a comparison is undertaken of the empirical results obtained for the eleven regions and the respective unemployment movements. Following this comparison, it is possible to conclude that the contrasting unemployment experiences of the regions of the UK have contributed significantly to, yet cannot account for fully, the observed differences in consumption behaviour.

Suggested Citation

  • Robert Gausden & Ian Alan Whitfield, 2000. "Testing the stochastic implications of the life cycle-permanent income hypothesis using UK regional time-series data," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1299-1310.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:10:p:1299-1310
    DOI: 10.1080/000368400404452
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/000368400404452
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/000368400404452?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. John Campbell & Angus Deaton, 1989. "Why is Consumption So Smooth?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(3), pages 357-373.
    3. Daly, Vince & Hadjimatheou, George, 1981. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Evidence for the U. K. Economy: Comment," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 596-599, June.
    4. Muellbauer, John, 1994. "The Assessment: Consumer Expenditure," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 10(2), pages 1-41, Summer.
    5. Paul Johnson, 1983. "Life‐Cycle Consumption under Rational Expectations: Some Australian Evidence," The Economic Record, The Economic Society of Australia, vol. 59(4), pages 345-350, December.
    6. repec:bla:ecorec:v:59:y:1983:i:167:p:345-50 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. KARGI, Bilal, 2014. "Türkiye Ekonomisinde Sürekli Gelir Hipotezine İlişkin Kanıtlar: Zaman Serileri Analizi (2004-2012) [Evidence for Turkey's Economy Permanent Income Hypothesis: Time Series Analysis (2004-2012)]," MPRA Paper 55696, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sarno, Lucio & Taylor, Mark P., 1998. "Real Interest Rates, Liquidity Constraints and Financial Deregulation: Private Consumption Behavior in the U.K," Journal of Macroeconomics, Elsevier, vol. 20(2), pages 221-242, April.
    2. repec:zbw:bofrdp:1995_015 is not listed on IDEAS
    3. Takala, Kari, 1995. "Permanent income hypothesis and saving in Finland," Research Discussion Papers 15/1995, Bank of Finland.
    4. Takala, Kari, 1995. "Permanent income hypothesis and saving in Finland," Bank of Finland Research Discussion Papers 15/1995, Bank of Finland.
    5. Palumbo, Michael & Rudd, Jeremy & Whelan, Karl, 2006. "On the Relationships Between Real Consumption, Income, and Wealth," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 1-11, January.
    6. Luo, Yulei & Young, Eric R., 2016. "Induced uncertainty, market price of risk, and the dynamics of consumption and wealth," Journal of Economic Theory, Elsevier, vol. 163(C), pages 1-41.
    7. Emilio Fernandez-Corugedo, 2004. "Consumption Theory," Handbooks, Centre for Central Banking Studies, Bank of England, number 23, April.
    8. Jean‐Paul L'Huillier & Donghoon Yoo, 2019. "Where is the GE? Consumption Dynamics in DSGEs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(6), pages 1491-1502, September.
    9. Luis A. Gil-Alana & Antonio Moreno & Seonghoon Cho, 2012. "The Deaton paradox in a long memory context with structural breaks," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3309-3322, September.
    10. Yulei Luo & William T. Smith & Heng-fu Zou, 2009. "The Spirit of Capitalism and Excess Smoothness," Annals of Economics and Finance, Society for AEF, vol. 10(2), pages 281-301, November.
    11. Issler, Joao Victor & de Mello Franco-Neto, Afonso Arinos & de Carvalho Guillen, Osmani Teixeira, 2008. "The welfare cost of macroeconomic uncertainty in the post-war period," Economics Letters, Elsevier, vol. 98(2), pages 167-175, February.
    12. Charlotte Ostergaard & Bent E. Serensen & Oved Yosha, 2002. "Consumption and Aggregate Constraints: Evidence from U.S. States and Canadian Provinces," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 634-645, June.
    13. Abdelhak S. Senhadji, 2000. "How Significant are Departures from Certainty Equivalence? Some Analytical and Empirical Results," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(3), pages 597-617, July.
    14. Christopher D. Carroll & Edmund Crawley & Jiri Slacalek & Kiichi Tokuoka & Matthew N. White, 2020. "Sticky Expectations and Consumption Dynamics," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(3), pages 40-76, July.
    15. Athanasopoulos, George & de Carvalho Guillén, Osmani Teixeira & Issler, João Victor & Vahid, Farshid, 2011. "Model selection, estimation and forecasting in VAR models with short-run and long-run restrictions," Journal of Econometrics, Elsevier, vol. 164(1), pages 116-129, September.
    16. José Casado, 2011. "From income to consumption: measuring households partial insurance," Empirical Economics, Springer, vol. 40(2), pages 471-495, April.
    17. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2014. "Consumption and Labor Supply with Partial Insurance: An Analytical Framework," American Economic Review, American Economic Association, vol. 104(7), pages 2075-2126, July.
    18. Hendry, David F. & Mizon, Grayham E., 2001. "Reformulating empirical macro-econometric modelling," Discussion Paper Series In Economics And Econometrics 104, Economics Division, School of Social Sciences, University of Southampton.
    19. Vinod, H. D. & Basu, Parantap, 1995. "Forecasting consumption, income and real interest rates from alternative state space models," International Journal of Forecasting, Elsevier, vol. 11(2), pages 217-231, June.
    20. Jim Malley & Hassan Molana, 1999. "The Permanent Income Hypothesis Revisited," Dundee Discussion Papers in Economics 105, Economic Studies, University of Dundee.
    21. Petra Gerlach-Kristen & Rossana Merola, 2019. "Consumption and credit constraints: a model and evidence from Ireland," Empirical Economics, Springer, vol. 57(2), pages 475-503, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:32:y:2000:i:10:p:1299-1310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.