TITLE

AGGREGATE STOCHASTIC IMPLICATIONS OF THE LIFE CYCLE HYPOTHESIS

AUTHOR(S)
Clarida, Richard H.
PUB. DATE
August 1991
SOURCE
Quarterly Journal of Economics;Aug91, Vol. 106 Issue 3, p851
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article sets forth various key aggregate stochastic implications of the Modigliani-Brumberg life cycle model can help to explain the first and second moment properties of changes in per capita consumption. Changes in consumption will be less volatile than changes in actual income only if the latter is more volatile than permanent income. Change in permanent income is just the discounted present value of the revision in expectations of current and future labor income. The innovation in labor income is also the innovation in permanent income.
ACCESSION #
5791039

 

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