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| Author: | Molana, H. |
| Title: | The time series consumption function: Error correction, random walks and the steady-state |
| Journal: | Economic Journal
1991 : MAY, VOL. 101:406, p. 382-403 |
| Index terms: | TIME SERIES CONSUMPTION RANDOM WALKS STEADY STATE MODELS SAVINGS HOUSEHOLD ECONOMICS |
| Language: | eng |
| Abstract: | Striking differences have been reported in the literature between the empirical implications of studies with Error Correction /EC/ and Random Walk /RW/ formalisms. While EC models heavily rely on the long-run features of the economy, the existing variants of the RW model fail to provide a thorough picture of the steady-state aspects of the consumption/saving allocation problem faced by households, and only focus on the properties of the optimal time path of consumption. It is important to have a theory which explains the short-run situation accurately and possesses consistent and meaningful long-run properties. This paper looks at this aspect of the problem. |
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