Why is Consumption So Smooth?

S-Tier
Journal: Review of Economic Studies
Year: 1989
Volume: 56
Issue: 3
Pages: 357-373

Authors (2)

John Campbell (Harvard University) Angus Deaton (not in RePEc)

Score contribution per author:

4.022 = (α=2.01 / 2 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

For thirty years it has been accepted that consumption is smooth because permanent income is smoother than measured income. This paper considers the evidence for the contrary position, that permanent income is in fact less smooth than measured income, so that the smoothness of consumption cannot be straightforwardly explained by permanent income theory. The paper argues that in postwar U.S. quarterly data, consumption is smooth because it responds with a lag to changes in income.

Technical Details

RePEc Handle
repec:oup:restud:v:56:y:1989:i:3:p:357-373.
Journal Field
General
Author Count
2
Added to Database
2026-01-25