A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States

Journal of Money, Credit and Banking, Vol. 36, No. 6, pp. 1091-1103, December 2004

Posted: 31 Mar 2013

See all articles by Joseph P. DeJuan

Joseph P. DeJuan

University of Waterloo - Department of Economics

John J. Seater

Economics Dept., Boston College

Tony S. Wirjanto

University of Waterloo - School of Accounting and Finance; University of Waterloo, Department of Statistics & Actuarial Science

Date Written: December 1, 2004

Abstract

This paper tests the prediction of the Permanent Income Hypothesis (PIH) that news about future income induce a revision in consumption equal to the revision in permanent income. We use time-series data from 48 contiguous US states to perform the test. The empirical results provide some support for the PIH across states.

Keywords: Permanent income, Consumption, US states

JEL Classification: E21

Suggested Citation

DeJuan, Joseph P. and Seater, John J. and Wirjanto, Tony S., A Direct Test of the Permanent Income Hypothesis with an Application to the U.S. States (December 1, 2004). Journal of Money, Credit and Banking, Vol. 36, No. 6, pp. 1091-1103, December 2004 , Available at SSRN: https://ssrn.com/abstract=2241870

Joseph P. DeJuan

University of Waterloo - Department of Economics ( email )

Waterloo, Ontario N2L 3G1
Canada

John J. Seater

Economics Dept., Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Tony S. Wirjanto (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x35210 (Phone)

HOME PAGE: http://https://uwaterloo.ca/statistics-and-actuarial-science/people-profiles/tony-wirjanto

University of Waterloo, Department of Statistics & Actuarial Science ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x35210 (Phone)
519-746-1875 (Fax)

HOME PAGE: http://math.uwaterloo.ca/statistics-and-actuarial-science/people-profiles/tony-wirjanto

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