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Title:International evidence on sticky consumption growth PDF Logo
Authors:Carroll, Christopher D.
Slacalek, Jiri
Sommer, Martin
Issue Date:2008
Series/Report no.:Working papers // the Johns Hopkins University, Department of Economics 542
Abstract:We estimate the degree of 'stickiness' in aggregate consumption growth (sometimes interpreted as reflecting consumption habits) for thirteen advanced economies. We find that, after controlling for measurement error, consumption growth has a high degree of autocorrelation, with a stickiness parameter of about 0.7 on average across countries. The sticky-consumption-growth model outperforms the random walk model of Hall (1978), and typically fits the data better than the popular Campbell and Mankiw (1989) model. In several countries, the sticky-consumption-growth and Campbell-Mankiw models work about equally well.
Subjects:Sticky Expectations
Consumption Dynamics
Habit Formation
JEL:E21
F41
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, The Johns Hopkins University

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