Title: Variable Lifespan and the Intertemporal Elasticity of Consumption
Abstract: The focus of the paper is to measure how consumption responds to changes in the interest rate. The equivalence between the effect of the interest rate, and the effect of mortality probabilities, on consumption is used to gain an estimate of the intertemporal elasticity of substitution between current and future consumption. Seemingly unrelated regressions in a cross-sectional model of consumption, earnings, and assets are used to provide efficient estimates of the intertemporal parameter. The regression results suggest that the elasticity is somewhat higher than previously thought.
Publication Year: 1985
Publication Date: 1985-11-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 80
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