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Rational International: A Cross-Country Study of the Permanent Income Hypothesis

Linde, Viktor LU (2023) NEKN01 20231
Department of Economics
Abstract (Swedish)
This study investigates the validity of the Permanent Income Hypothesis (PIH) across seven
countries from 1970 to 2021. Using Hall's random-walk model and Campbell and Mankiw’s
IV model, I investigate if the consumption patterns align with the implications of the PIH and
if there are differences between the countries studied. The analysis suggests evidence against
the PIH, revealing deviations from the expectations in many cases. At the same time, some
countries’ populations show consumption patterns that align with the PIH, providing some
evidence in favour of the theory. The differences between countries also suggest that there
are other variables, such as culture, that might influence consumption patterns as well.
Please use this url to cite or link to this publication:
author
Linde, Viktor LU
supervisor
organization
course
NEKN01 20231
year
type
H1 - Master's Degree (One Year)
subject
keywords
Permanent Income Hypothesis, Consumption Theory
language
English
id
9135986
date added to LUP
2023-09-12 15:37:14
date last changed
2023-09-12 15:37:14
@misc{9135986,
  abstract     = {{This study investigates the validity of the Permanent Income Hypothesis (PIH) across seven 
countries from 1970 to 2021. Using Hall's random-walk model and Campbell and Mankiw’s 
IV model, I investigate if the consumption patterns align with the implications of the PIH and 
if there are differences between the countries studied. The analysis suggests evidence against 
the PIH, revealing deviations from the expectations in many cases. At the same time, some 
countries’ populations show consumption patterns that align with the PIH, providing some 
evidence in favour of the theory. The differences between countries also suggest that there 
are other variables, such as culture, that might influence consumption patterns as well.}},
  author       = {{Linde, Viktor}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Rational International: A Cross-Country Study of the Permanent Income Hypothesis}},
  year         = {{2023}},
}