Template-Type: ReDIF-Paper 1.0
Author-Name:  Bent E. Sørensen
Author-X-Name-First: Bent 
Author-X-Name-Last: Sørensen
Author-Email:  bent.sorensen@mail.uh.edu
Author-Workplace-Name: Department of Economics, University of Houston
Author-Name:  Maria Jose Luengo-Prado	
Author-X-Name-First: Maria 
Author-X-Name-Last: Luengo-Prado
Author-Workplace-Name: Northeastern University
Author-Email: 
Title: What Can Explain Excess Smoothness and Sensitivity of State-Level Consumption?
Abstract: This article estimates marginal propensities to consume (MPC) out of current and lagged
income for U.S. states using panel data regressions that control for time-specific and state-level
fixed effects. The MPCs vary across states, in particular, the MPC out of current income
is higher in states where income is more persistent and the MPC out of lagged income is
lower in agricultural states. Several models of individual consumer behavior are analyzed
and simulated in order to isolate a model which is able to match the estimated MPCs well.
Length:  40 pages
Creation-Date:  2005-02
File-URL: http://www.uh.edu/econpapers/RePEc/hou/wpaper/2005-03.pdf
File-Format: Application/pdf
Number: 2005-03
Classification-JEL: E21 - Consumption; Saving.
Keywords: Permanent Income, Credit Rationing, Precautionary saving, Time-Aggregation, Durable Goods, Risk Sharing.
Handle: RePEc:hou:wpaper:2005-03