household consumption, life-cycle model, naive alternative, non-nested test

Publication date: 12 May 2003 | Publication type: NIESR Discussion Paper | Theme: Trade, Investment & Productivity, Britain & Finance | Authors: Riley, R, Weale, M | JEL classification: D91, E21 | NIESR discussion paper number: 206
We use successive datasets from the U.K. Family Expenditure Survey to estimate a closed form consumption function for households facing uncertain future income. The closed form is derived from a model of absolute risk aversion modified to reflect differences in consumers' circumstances (quasi-...