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Non-Linear Consumption Dynamics, Research Paper 9726

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Non-Linear Consumption Dynamics, Research Paper 9726

DATE: August 1997

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ABSTRACT: Taking explicitly into account the forward-looking nature of consumption, this paper derives a non-linear equation for consumption growth in which the coefficient of contemporaneous expected income growth is an increasing (decreasing) function of lagged variables positively (negatively) correlated with future income growth. Estimating it with aggregate data, the paper finds statistically and economically significant non-linear consumption dynamics for three major industrial countries. These dynamics imply, among other things, that monetary policy may have a more immediate and profound effect on consumption, and through it on real economic activity, than commonly thought.

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Antzoulatos, Angelos A. "Non-Linear Consumption Dynamics, Research Paper 9726," Research Papers (Federal Reserve Bank of New York) (August 1997). https://fraser.stlouisfed.org/title/6570/item/615578, accessed on March 30, 2023.

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THEMES: CLASSIFICATION:
  • jel: E21
  • jel: E32
  • lcc: HG136 .R45 no.9726
IDENTIFIERS:
  • oclc: 37741482
  • repec: fip:fednrp:9726
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