SFB 303 Discussion Paper No. B - 10

Author: Weissenberger, E.
Title: The Life Cycle Hypothesis, Rational Expectations and Intertemporally Non-Separable Preferences
Abstract: In this paper the demand for non-durable and durable consumption is derived as the outcome of an intertemporal optimisation problem. We find that consumption depends on the sum of non-human and unobservable human wealth and that the imposition of the rational expectations assumption about human wealth evaluation yields testable cross-equation restrictions. Strictly convex adjustment costs give dynamic demand functions. Results based on UK time series data are presented. The cross-equations restrictions implied by a weak version of the rational expectations hypotheseis cannot be rejected.
Creation-Date: 1985
Unfortunately this paper is not available online. Please contact us to order a hardcopy.

SFB 303 Homepage

07.09.1999, Webmaster