Jappelli, Tullio; Pistaferri, Luigi - Centro Studi di Economia e Finanza (CSEF) - 1999
The theory of full consumption insurance posits that households are insulated from all idiosyncratic shocks so that the … ratio of the marginal utilities of consumption of any two households is constant over time. Consumption insurance therefore … measurement error in consumption. The findings strongly reject the theory of full consumption insurance. …