Pedroni, Marcelo; Singh, Swapnil; Stoltenberg, Christian - 2022 - Preliminary, April 15, 2022
consumption insurance. Based on insights from a theoretical model, we propose a new test to detect advance information, which … requires only panel data on consumption and income. Using the Panel Study of Income Dynamics, we find-in contrast to the … incomplete markets model and find that advance information reduces households' income forecast errors by 15%. Our estimation …