Can Consumers Distinguish Persistent from Transitory Income Shocks?

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Standard

Can Consumers Distinguish Persistent from Transitory Income Shocks? / Druedahl, Jeppe; Jørgensen, Thomas Høgholm.

I: The Economic Journal, Bind 130, Nr. 632, 11.2020, s. 2410–2437.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Harvard

Druedahl, J & Jørgensen, TH 2020, 'Can Consumers Distinguish Persistent from Transitory Income Shocks?', The Economic Journal, bind 130, nr. 632, s. 2410–2437. https://doi.org/10.1093/ej/ueaa047

APA

Druedahl, J., & Jørgensen, T. H. (2020). Can Consumers Distinguish Persistent from Transitory Income Shocks? The Economic Journal, 130(632), 2410–2437. https://doi.org/10.1093/ej/ueaa047

Vancouver

Druedahl J, Jørgensen TH. Can Consumers Distinguish Persistent from Transitory Income Shocks? The Economic Journal. 2020 nov.;130(632):2410–2437. https://doi.org/10.1093/ej/ueaa047

Author

Druedahl, Jeppe ; Jørgensen, Thomas Høgholm. / Can Consumers Distinguish Persistent from Transitory Income Shocks?. I: The Economic Journal. 2020 ; Bind 130, Nr. 632. s. 2410–2437.

Bibtex

@article{9a24918fe1a14dacb52ffaf2c5ed7432,
title = "Can Consumers Distinguish Persistent from Transitory Income Shocks?",
abstract = "The degree to which consumers can distinguish persistent from transitory income shocks is paramount for consumption-saving dynamics. In particular, even a small amount of imperfect information causes a severe bias in conventional estimators of the marginal propensity to consume. We provide a novel method that can identify consumers{\textquoteright} degree of information by using panel data on income and consumption, even allowing for measurement error. Employing our method to data from the Panel Study of Income Dynamics, we find that households have almost perfect information. This robust result indicates that the conventional estimators of the marginal propensity to consume are on firm ground.",
author = "Jeppe Druedahl and J{\o}rgensen, {Thomas H{\o}gholm}",
year = "2020",
month = nov,
doi = "10.1093/ej/ueaa047",
language = "English",
volume = "130",
pages = "2410–2437",
journal = "The Economic Journal",
issn = "0013-0133",
publisher = "Wiley",
number = "632",

}

RIS

TY - JOUR

T1 - Can Consumers Distinguish Persistent from Transitory Income Shocks?

AU - Druedahl, Jeppe

AU - Jørgensen, Thomas Høgholm

PY - 2020/11

Y1 - 2020/11

N2 - The degree to which consumers can distinguish persistent from transitory income shocks is paramount for consumption-saving dynamics. In particular, even a small amount of imperfect information causes a severe bias in conventional estimators of the marginal propensity to consume. We provide a novel method that can identify consumers’ degree of information by using panel data on income and consumption, even allowing for measurement error. Employing our method to data from the Panel Study of Income Dynamics, we find that households have almost perfect information. This robust result indicates that the conventional estimators of the marginal propensity to consume are on firm ground.

AB - The degree to which consumers can distinguish persistent from transitory income shocks is paramount for consumption-saving dynamics. In particular, even a small amount of imperfect information causes a severe bias in conventional estimators of the marginal propensity to consume. We provide a novel method that can identify consumers’ degree of information by using panel data on income and consumption, even allowing for measurement error. Employing our method to data from the Panel Study of Income Dynamics, we find that households have almost perfect information. This robust result indicates that the conventional estimators of the marginal propensity to consume are on firm ground.

U2 - 10.1093/ej/ueaa047

DO - 10.1093/ej/ueaa047

M3 - Journal article

VL - 130

SP - 2410

EP - 2437

JO - The Economic Journal

JF - The Economic Journal

SN - 0013-0133

IS - 632

ER -

ID: 252111260