Uninsurable income risk is often cited as an explanation for empirical deviations from the Lifecycle/Permanent-Income … estimating income uncertainty essentially measure the cross-sectional variance of a subpopulation rather than the true … income uncertainty. We measure income uncertainties as the variance of income forecasting errors at different ages and over …

log consumption, assets, and labor income will be cointegrated. They conclude that this cointegrating relationship is …, assets, and labor income that are jointly consistent with an underlying budget constraint. By contrast, Lettau and Ludvigson …