Estimating intertemporal elasticity of substitution: the case of log- linear restrictions

Are linear regression models reliable in testing whether high expected real interest rates encourage current savings and deferred consumption? Here, a Monte Carlo test shows that a linear model yields a fairly accurate estimate and small standard error, but is highly susceptible to specification bias.

MoreLess

Year of publication:	1989
Authors:	Mao, Ching-Sheng
Published in:	Economic Review. - Federal Reserve Bank of Richmond. - 1989, Nov, v. 76, no. 6, p. 3-14
Publisher:	Federal Reserve Bank of Richmond
Subject:	Interest rates \| Consumption (Economics)

More details

Extent:	application/pdf
Type of publication:	Article
Language:	English
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005063841