WEALTH, DISPOSABLE INCOME AND CONSUMPTION - Economics

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38 0.5 0.0 –0.5 –1.0 0.8 0.6 0.4 0.2 0.0 –0.2 0.5 0.0 –0.5 –1.0 –1.5 Figure 10 Recursive parameter estimates: Keynesian ECM Error-correction term 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 Contemporaneous first difference of disposable income 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 First difference of relative price of consumption 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992
1.5 1.0 0.5 0.0 –0.5 –1.0 –1.5 0.015 0.010 0.005 0.000 –0.005 –0.010 –0.015 –0.020 Figure 10 (continued) First difference of real interest rate 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 First difference of unemployment rate 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 The second-column results in Table 8 present an estimated EC model that is based on a long-run consumption function that includes both disposable income and total wealth. The most noticeable feature of this dynamic consumption function is that the EC term is larger in magnitude; this is consistent with the stronger evidence of cointegration reported in Table 5 when wealth is included. A second feature of the EC model that includes wealth is that the coefficient on the real interest rate is about a third as large as in the Keynesian model, and is now no longer significantly different from zero at 39
Page 1 and 2: November 1994 WEALTH, DISPOSABLE IN
Page 3: CONTENTS ACKNOWLEDGMENTS ..........
Page 7 and 8: ABSTRACT The author develops a meas
Page 9 and 10: 1 INTRODUCTION Empirical research o
Page 11 and 12: impact of fluctuations in the price
Page 13 and 14: 2 MEASURING WEALTH In a competitive
Page 15 and 16: ∞ 1 + xt + j Ht = Xt 1 + E ⎛ t
Page 17 and 18: 2.3 percentage points) between the
Page 19 and 20: The time-series properties of net i
Page 21 and 22: expectation operator. Instead, the
Page 23 and 24: Table 3 Cumulative growth factors u
Page 25 and 26: 180 000 160 000 140 000 120 000 100
Page 27 and 28: non-residential structures, machine
Page 29 and 30: 80 000 70 000 60 000 50 000 40 000
Page 31 and 32: 3 IS WEALTH USEFUL IN EXPLAINING CO
Page 33 and 34: contrast, appears to be trend-stati
Page 35 and 36: First, there is little evidence tha
Page 37 and 38: Both estimators correct for the end
Page 39 and 40: cointegrating parameters reported i
Page 41 and 42: consumption, disposable income and
Page 43 and 44: Table 8 Error-correction models for
Page 48 and 49: 40 conventional levels. Presumably
Page 50 and 51: 42 0.5 0.0 -0.5 -1.0 0.6 0.4 0.2 0.
Page 53 and 54: 15 000 14 000 13 000 12 000 11 000
Page 55 and 56: 4 CONCLUSION The wealth measure dev
Page 57 and 58: APPENDIX 1: The data This appendix
Page 59 and 60: TAX = taxes net of transfers = (NET
Page 61 and 62: = FINAQ_CD+FINAQ_CC+FINAQ_OBDS + FI
Page 63 and 64: CPPQ = Canada Pension Plan. D162590
Page 65 and 66: RAC = average coupon rate = RAC(t-1
Page 67 and 68: APPENDIX 2: Closed-form solution fo
Page 69 and 70: APPENDIX 3: Wealth and its componen
Page 71: 87:2 356297.31 295864.21 60433.10 3
Page 74 and 75: 64 Flavin, M. A. 1981. “The Adjus
Page 76 and 77: 66 Perron, P. 1991. “Test Consist

WEALTH, DISPOSABLE INCOME AND CONSUMPTION - Economics

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