THE “PERMANENT INCOME” AND THE “LIFE CYCLE” HYPOTHESIS OF SAVING BEHAVIOR: COMPARISON AND TESTS

1960 ◽  
pp. 533-658 ◽  
Keyword(s):  
Life Cycle ◽  
Permanent Income ◽  
Saving Behavior ◽  
Life Cycle Hypothesis

scholarly journals The Life Cycle Hypothesis and Uncertainty: Analyzing Aging Savings Relationship in Tunisia

2022 ◽  
Author(s):  
Olfa Frini
Keyword(s):  
Life Cycle ◽  
Population Aging ◽  
Auxiliary Variable ◽  
Structural Var ◽  
Var Model ◽  
Age Dependency ◽  
Impulse Function ◽  
Saving Behavior ◽  
Life Cycle Hypothesis ◽  
Age Dependency Ratio

This research empirically checks the effect of uncertainty on aging-saving link that is indirectly captured by an auxiliary variable: the unemployment. It looks at the nexus population aging and savings by bringing out the unemployment context importance in determination saving behavior notably in a setting of unavailability of unemployment allowance. To better estimate population aging, it considers the old-age dependency ratio besides the total dependency one, which is the usually indicator used. Applying the Structural VAR model, the variance decomposition technique and the response impulse function, on Tunisia during 1970–2019, it puts on show that elderly do not dissave in a context of enduring unemployment and unavailability of unemployment allowance. Unemployment is an important factor able to shaping the saving behavior and to distort the life cycle hypothesis’s prediction. Consequently, the life cycle hypothesis cannot be validated under uncertainty. Hence, aging does not to alter savings systematically. The nature of aging-saving relationship is upon to social and economic context.

scholarly journals An Empirical Evaluation of Consumption Behaviour in Oil Societies: The Case of Kuwait

1984 ◽  
Vol 23 (1) ◽  
pp. 81-94
Author(s):  
Sulayman S. Al-Qudsi
Keyword(s):  
Life Cycle ◽  
Empirical Evaluation ◽  
Empirical Work ◽  
Permanent Income ◽  
Data Sets ◽  
Consumption Function ◽  
Keynesian Model ◽  
Survey Results ◽  
Life Cycle Hypothesis ◽  
Income Model

Theories of consumption function have been tested for many developed and underdeveloped economies with grouped data sets. No empirical work has been done to confirm or disconfirm these theories in the oil-rich economies of the Middle East. This paper applies Kuwait's rich micro data of the 1972-73 budget survey results to the principal consumption models - the Keynesian Model, the Kaldor Hypothesis, the Friedman Permanent-Income Model and the Life-Cycle Hypothesis. The results of this empirical investigation disconfirm the validity of the strict version of the Permanent-income Hypothesis in favour of the Keynesian and the looser version of the Permanent-Income Hypotheses. The Kaldor model is not strictly applicable and the saving behaviour of Kuwaiti households seems to give support to the Life-Cycle Hypothesis.

TESTING THE PERMANENT-INCOME/LIFE-CYCLE HYPOTHESIS WITH AGGREGATE DATA

1998 ◽  
Vol 2 (3) ◽  
pp. 401-425 ◽  
Author(s):  
John J. Seater
Keyword(s):  
Life Cycle ◽  
Euler Equation ◽  
Aggregate Data ◽  
Permanent Income ◽  
Consumption Function ◽  
Aggregated Data ◽  
Aggregate Consumption ◽  
Life Cycle Hypothesis

The aggregate implications of the permanent-income/life-cycle hypothesis (PILCH) are derived rigorously. Virtually all empirical rejections of PILCH based on aggregated data are shown to result from misspecifications or from characteristics of aggregate data that have been overlooked. Valid aggregate tests are proposed. Those based on a properly formulated aggregate consumption function may be superior to those based on Euler-equation methods.

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