Consumption Function for Poland : Is Life Cycle Hypothesis Legitimate?

• Autorzy: Katarzyna Leszkiewicz-Kędzior , Władysław Welfe
• Języki publikacji: EN

Abstrakty

EN

In industrialized countries the rising percentage of households behaves rationally. It is represented by the life cycle hypothesis of determining their incomes. This concept was taken into account in many macroeconometric multicountry models. The W models of the Polish economy assumed the number of such households is small and consequently this approach was neglected. The paper presents the results of a research aimed at empirical testing whether the share of "rational" households in Poland was small and their majority was income constrained. We calculated the expected life cycle income on the basis of information on the structure of employment by age. The empirical study was conducted using annual data for the years 1970-2008. The obtained results show that the share of "rational" households was below 10% in the long run. But in the short run they showed a tendency of increasing up the share to more than 20%. (original abstract)

Słowa kluczowe

EN

Models of national economies; Households; Household income; Consumption; Life cycles; Macroeconomic models; Empirical analysis

PL

Modele gospodarki narodowej; Gospodarstwa domowe; Dochody gospodarstw domowych; Konsumpcja; Cykl życia; Modele makroekonomiczne; Analiza empiryczna

• Czasopismo: Bank i Kredyt
• Rocznik: 2012
• Numer: nr 5
• Strony: 5--20

Twórcy

autor

Katarzyna Leszkiewicz-Kędzior

• University of Lodz, Poland

autor

Władysław Welfe

• University of Lodz, Poland

Bibliografia

• Ando A., Modigliani F. (1963), The life cycle hypothesis of saving: aggregate implications and tests, American Economic Review, 53(1), 55-84.
• Barrell R., Becker B., Byrne J., Gottschalk S., Hurst A.I., van Welsum D. (2004), Macroeconomic policy in Europe: experiments with monetary responses and fiscal impulses, Economic Modelling, 21(6), 877-931.
• Beneš J., Hlédik T., Kumhof M., Vávra D. (2005), An economy in transition and DSGE: what the Czech National Bank's new projections model needs, Working Paper Series, 12, Czech National Bank, Praha.
• Blanchard O.J. (1985), Debt, deficits and finite horizons, Journal of Political Economy, 93(1), 223-247.
• Brown T.M. (1952), Habit persistence and lags in consumer behaviour, Econometrica, 20(2), 355-371.
• Campbell J.Y., Mankiw N.G. (1991), The response of consumption to income: a cross country investigation, European Economic Review, 35(4), 723-756.
• Carroll C. (1994), How does future income affect current consumption?, The Quarterly Journal of Economics, 109(1), 111-147.
• Davidson J.E.H., Hendry D.F., Srba F., Yeo S. (1978), Econometric modelling of the aggregate time- -series relationship between consumers' expenditure and income in the United Kingdom, Economic Journal, 88(6), 661-692.
• Davidson R., MacKinnon J. (1993), Estimation and inference in econometrics, Oxford University Press, New York.
• Engle R.F., Granger C.W.J. (1987), Co-integration and error correction: representation, estimation, and testing, Econometrica, 55(2), 251-276.
• Fair R.C. (2004), Estimating how the macroeconomy works, Harvard University Press, Cambridge.
• Florczak W. (2011), W kierunku endogenicznego i zrównoważonego rozwoju - perspektywa makroekonometryczna, Wydawnictwo Uniwersytetu Łódzkiego, Łódź.
• Friedman M. (1957), A theory of the consumption function, Princeton University Press, Princeton.
• Hall R.E. (1978), Stochastic implications of the life cycle-permanent income hypothesis: theory and evidence, Journal of Political Economy, 86(6), 971-987.
• Harrison R., Nikolov K., Quinn M., Ramsay G., Scott A., Thomas R. (2005), The Bank of England quarterly model, Bank of England, London.
• Hendry D.F., von Ungern-Sternberg T. (1981), Liquidity and inflations effects on consumers' expenditure, w: A.S. Deaton (ed.), Essays in the theory and measurement of consumers' behaviour, Cambridge University Press, Cambridge.
• Huggett M. (1996), Wealth distribution in life-cycle economies, Journal of Monetary Economics, 109(3), 469-494.
• Kwiatkowski D., Phillips P.C.B., Schmidt P., Shin Y. (1992), Testing the null hypothesis of stationarity against the alternative of a unit root: how sure are we that economic time series have a unit root?, Journal of Econometrics, 54(1), 159-178.
• Lettau M., Ludvigson S. (2001), Consumption, aggregate wealth and expected stock returns, Journal of Finance, 16, 815-849.
• Levin A.T., Rogers J.H., Tryon R.W. (1997), A guide to FRB/Global, International Finance Discussion Papers, 588, FRS, Washington.
• Masson P.R., Symansky S.A., Meredith G. (1990), MULTIMOD MARK II: a revised and extended model, IMF Occasional Paper, 71, International Monetary Fund, Washington D.C.
• Modigliani F. (1966), The life cycle hypothesis of saving, the demand for wealth and the supply of capital, Social Research, 33(1), 160-217.
• Modigliani F. (1975), The life cycle hypothesis of saving twenty years later, in: M. Parkin, A.R. Nobay (eds.), Contemporary issues in economics, Manchester University Press, Manchester.
• Modigliani F., Ando A. (1957), Tests of the life cycle hypothesis of saving: comments and suggestions, Bulletin of the Oxford University Institute of Statistics, 19, 99-124.
• Modigliani F., Brumberg R. (1954), Utility analysis and the consumption function: an interpretation of cross-section data, in: K. Kurihara (ed.), Post Keynesian economics, Rutgers University Press, New Brunswick, NJ.
• Muellbauer J., Lattimore R. (1995), The consumption function: a theoretical and empirical overview, in: M.H. Pesaran, M.R. Wickens (eds.), Handbook of applied econometrics, Blackwell, Oxford.
• Roeger W., in't Veld J. (1997), QUEST II: a multicountry business cycle and growth model, Economic Papers, 123, Europen Comission.
• Smets F., Wouters R. (2003), An estimated dynamic stochastic general equilibrium model of the euro area, Journal of the European Economic Association, 1(6), 1123-1175.
• Welfe W. (2001), Ekonometryczny model wzrostu gospodarczego, Wydawnictwo Uniwersytetu Łódzkiego, Łódź.
• Zachłod-Jelec M. (2010), Interrelations between consumption and wealth in Poland, Central European Journal of Economic Modelling and Econometrics, 1, 37-57.