Wealth-varying intertemporal elasticities of substitution: Evidence from panel and aggregate data

Andrew Atkeson, Masao Ogaki

Research output: Contribution to journalArticle

95 Citations (Scopus)

Abstract

This paper constructs and estimates a model of consumer preferences in which the intertemporal elasticity of substitution (IES) of consumption expenditure rises with the level of wealth. The purpose of this paper is to measure the effect that systematic variation in the IES of poor and rich consumers has on the IES of aggregate consumption expenditure. We find economically significant differences in the IES of poor and rich consumers in Indian panel data on the consumption of individual households. We also find economically significant differences in the IES measured in aggregate time series data for the U.S. and India.

Original languageEnglish
Pages (from-to)507-534
Number of pages28
JournalJournal of Monetary Economics
Volume38
Issue number3
DOIs
Publication statusPublished - 1996 Dec

Keywords

  • Consumption
  • Necessary goods
  • Subsistence levels

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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