IS THE ELASTICITY OF INTERTEMPORAL SUBSTITUTION CONSTANT?
نویسندگان
چکیده
منابع مشابه
Is the Elasticity of Intertemporal Substitution Constant?∗
This paper shows that the CRRA specification of intertemporal preferences (implying a constant elasticity of intertemporal substitution, or EIS), imposes surprising limitations on within period budget allocations. Consequently, the constant EIS assumption can be tested with demand data. In fact, the parameter of the CRRA utility function is pinned down completely by the shape of Engel curves; i...
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We[1] present estimates of the Elasticity of Intertemporal Substitution (EIS) for Iranian households using synthetic cohort panels based on household micro-data. Results show significant difference with the common values used in Dynamic Stochastic General Equilibrium (DSGE) models which are originally based on estimated values for developed countries. We show that this difference has important ...
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This paper investigates whether leisure time definitions matter in the estimation of the intertemporal elasticity of substitution of consumption (IES) by using a utility specification that allows interaction between consumption and leisure time. We find that the IES estimated using a narrowly defined leisure measure that excludes quasi-leisure activities is larger than that estimated using nonm...
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One of the most important behavioral parameters in macroeconomics is the elasticity of intertemporal substitution (EIS). Starting with the seminal work of Hall (1978), researchers have used an Euler equation framework to estimate the EIS, relating the growth rate of consumption to the after-tax interest rate facing consumers. This large literature has, however, produced very mixed results, perh...
متن کاملMaking the Case for a Low Intertemporal Elasticity of Substitution
We provide two ways to reconcile small values of the intertemporal elasticity of substitution (IES) that range between 0.35 and 0.5 with empirical evidence that the IES is large. We do this reconciliation using a model in which all agents have identical preferences and the same access to asset markets. We also conduct an encompassing test, which indicates that specifications of the model with s...
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ژورنال
عنوان ژورنال: Journal of the European Economic Association
سال: 2011
ISSN: 1542-4766
DOI: 10.1111/j.1542-4774.2010.01001.x