• Economics
  • Published 2001

The Wealth Effect in Empirical Life-Cycle Aggregate Consumption Equations

@inproceedings{Mehra2001TheWE,
  title={The Wealth Effect in Empirical Life-Cycle Aggregate Consumption Equations},
  author={Yash P. Mehra},
  year={2001}
}
This article presents an empirical model of U.S. consumer spending that relates consumption to labor income and household wealth. This specification is consistent with the life-cycle hypothesis of saving first popularized in the 1960s by Ando, Modigliani, and their cohorts. 1 My analysis here extends the previous research in several directions. First, I examine the dynamic relationship between consumption, income, and wealth using cointegration and error correction methodology. In previous… CONTINUE READING

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