We characterize the time-series properties of group-level consumption, income, and interest rates using microdata. We relate the coefficients of moving average representations to structural parameters of theoretical models of consumption behavior. Using long time series of cross sections to construct synthetic panel data for the United Kingdom, we find that for high-educated individuals the Euler equation restrictions are not rejected, the elasticity of intertemporal substitution is higher than one, and there is evidence of “excess smoothness” of consumption. Low-educated individuals, conversely, exhibit excess sensitivity of consumption to past income, and the elasticity of intertemporal substitution is not statistically different from zero.
Authors
![Orazio Attanasio](/sites/default/files/styles/square_desktop/public/2022-06/Orazio_Attanasio.jpg?itok=Anbs4JXx)
Research Fellow
Orazio is an International Research Fellow at the IFS, a Professor at Yale and a Research Associate at the National Bureau of Economic Research.
![Margherita Borella](/sites/default/files/styles/square_desktop/public/2022-07/Margherita%20Borella.png?itok=nK8H3sIU)
Research Associate University of Torino
Margherita is a Research Associate and an Associate Professor at the University of Torino.
Journal article details
- DOI
- 10.1111/iere.12079
- Publisher
- Wiley
- Issue
- October 2014
Suggested citation
Attanasio, O and Borella, M. (2014). 'Modelling Movements in Individual Consumption: A Time Series Analysis of Grouped Data' (2014)
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