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The balanced growth theory and the neoclassical growth model predict that certain macroeconomic variables such as …
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In a recent paper (quot;A Primer on the Economics and Time Series Econometrics of Wealth Effects,quot; 2001), Davis and Palumbo investigate the empirical relation between three cointegrated variables: aggregate consumption, asset wealth, and labor income. Although cointegration implies that an...
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responsible for subsequent swings in the growth rate of consumer spending. We show how simple economic theory is used to motivate …
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The present value model of the current account has been very popular, as it provides an optimal benchmark to which actual current account series have often been compared. We show why persistence in observed current account data makes the estimated optimal series very sensitive to small-sample...
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