Intertemporal Substitution in Consumption Revisited
Author | : Zuliu Hu |
Publisher | : |
Total Pages | : 26 |
Release | : 2006 |
ISBN-10 | : OCLC:1291213114 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Intertemporal Substitution in Consumption Revisited written by Zuliu Hu and published by . This book was released on 2006 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some of the highly controversial questions in macroeconomics critically hinge on the value of a single parameter of consumer preference--the elasticity of intertemporal substitution. This paper provides new estimates of this parameter for individual G-7 and a panel of twenty OECD countries. We find that single equation GMM estimates are typically small and imprecise, consistent with Hall's (1988) finding from the U.S. data. Estimation of a system of equations that takes into account the cross-equation restrictions implied by theory, however, generally gives larger and better determined values for the parameter. The panel procedure also yields relatively large estimates. Overall our multi-country results contradict the hypothesis of zero intertemporal substitution.