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AN EXPLORATORY ANALYSIS OF THE EFFECT OF CURRENT INCOME ON THE RELATIVE CHANGE IN AGGREGATE CONSUMPTION: A HETEROGENEOUS HOUSEHOLD APPROACH
Category: Econometrics
CONSUMPTION I Sunday 25th August 2002, 09:30 - 11:00, Room: 4.1
Session Chair(s):
Kris Jacobs, McGill University, CANADA
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Abstract:
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This paper attempts to discover the explanatory power of changes in the distribution of current income in explaining the relative change in aggregate consumption using a distributional approach of aggregation. The coefficients in the aggregate relation can be estimated separately from cross-section data as an average derivative of the individual consumption relation without requiring a specific functional form of this relation. We employ the nonparametric Direct Average Derivative Estimation Technique to estimate these coefficients using the British Family Expenditure Survey. It turns out that for most commodity groups the inclusion of dispersion in the income distribution, besides the mean, improves the predictive power of the model.
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Find this file in the \Papers\1320\ folder of this CD-ROM.
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