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Certainty Equivalence and the Excess Sensitivity of Private Consumption
Author(s) -
POZZI LORENZO,
MALENGIER GRIET
Publication year - 2007
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2007.00089.x
Subject(s) - certainty , equivalence (formal languages) , private consumption , econometrics , economics , consumption (sociology) , sensitivity (control systems) , mathematics , monetary economics , discrete mathematics , engineering , sociology , social science , geometry , electronic engineering , fiscal policy
For a panel of OECD countries, we show that the magnitude of the estimate for the excess sensitivity of private consumption to current income cannot be explained by a model based on certainty equivalence.