According to the permanent income logic, individuals form expectations about their ability to produce in the long run and decide how much to consume today according to their forecasts.This paper documents that deviations of current consumption from its permanent level warranted by...

Several papers show that the apparent disconnect between stock returns and consumption growth is due to mismeasurement in standard consumption data, and propose to use new consumption measures instead. This paper finds that standard consumption is valuable for asset pricing if one focuses on...