Publisher:
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract:
Recent empirical and theoretical studies have suggested that consumption growth reacts asymmetrically to positive and negative expected income growth. In this paper we investigate if this behavior is robust to a) assumptions on how the households form their expectations of future earnings and b) sampling frequency. After investigating the case for Swedish consumption using survey data and a panel of annual observations on 15 OECD countries we conclude that previous results can not easily be generalized