Skip Nav Destination
Close Modal
Update search
NARROW
Format
Journal
Date
Availability
1-1 of 1
John Sabelhaus
Close
Follow your search
Access your saved searches in your account
Would you like to receive an alert when new items match your search?
Sort by
Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2000) 82 (3): 431–438.
Published: 01 August 2000
Abstract
View article
PDF
The prediction that consumption-income ratios should decline as income rises in cross-sectional data is a feature of Friedman's (1957) permanent income hypothesis and other consumption-smoothing models. The theory thus provides a link between longitudinal income data and cross-sectional expenditure data: given measured income variability and a functional relationship between consumption and permanent income, we predict cross-sectional expenditure patterns and compare those predictions to actual values. Our approach cannot explain the actual skewness in consumption-income ratios under even the strictest consumption-smoothing model, which implies that income measurement error or other anomalies are affecting the data.