NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Intertemporal Substitution in Consumption

Robert E. Hall

NBER Working Paper No. 720 (Also Reprint No. r1089)
Issued in July 1981
NBER Program(s):   EFG

Does a higher real interest rate induce significant postponement of consumption? According to the theory developed here, this question can be answered by studying the relation between the rate of growth of consumption and expected real interest rates. In postwar data for the United States, expected real returns have declined over time in the stock market and for savings accounts. Over the same period, the rate of growth of consumption has been almost steady. The paper concludes that intertemporal substitution is weak, for if it were strong, the growth rate of consumption would have declined.

download in pdf format
   (653 K)

download in djvu format
   (452 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0720

Published: Journal of Political Economy, Vol. 96, No. 2, pp. 339-357, (1988). citation courtesy of

Users who downloaded this paper also downloaded* these:
Vissing-Jorgensen w8896 Limited Asset Market Participation and the Elasticity of Intertemporal Substitution
Gruber w11945 A Tax-Based Estimate of the Elasticity of Intertemporal Substitution
Hall w2265 Consumption
Mankiw, Rotemberg, and Summers w0898 Intertemporal Substitution in Macroeconomics
Hall and Mishkin w0505 The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us