A note on the average propensity to consume, wealth and threshold adjustment

We explore the connection between the average propensity to consume (APC) and wealth to income ratio (WY) in the US. We find evidence of a long-run relationship characterised by threshold error correction. It is the APC that responds to long-run disequilibrium where the speed of adjustment is asymmetric insofar as being most likely fastest in regimes characterised by a high APC and low WY.

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Year of publication:	2013
Authors:	Holmes, Mark J. ; Shen, Xin
Published in:	Economic Modelling. - Elsevier, ISSN 0264-9993. - Vol. 35.2013, C, p. 309-313
Publisher:	Elsevier
Subject:	Threshold error correction \| Average propensity to consume \| Wealth

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Type of publication:	Article
Classification:	E2 - Consumption, Saving, Production, Employment, and Investment ; E1 - General Aggregative Models ; C3 - Econometric Methods: Multiple/Simultaneous Equation Models
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010719399