TY  - JOUR
AU  - Hall,Robert E.
TI  - Real Interest and Consumption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1694
PY  - 1985
Y2  - August 1985
UR  - http://www.nber.org/papers/w1694
L1  - http://www.nber.org/papers/w1694.pdf
N1  - Author contact info:
Robert E. Hall
Hoover Institution
Stanford University
Stanford, CA  94305-6010
Tel: 650/723-2215
E-Mail: rehall@gmail.com
AB  - One of the important determinants of the response of saving and consumption to the real interest rate is the elasticity of intertemporal substitution. That elasticity can be measured by the response of the rate of change of consumption to changes in the expected real interest rate. A detailed study of data for the twentieth-century United States shows no strong evidence that the elasticity of intertemporal substitution is positive. Earlier studies flnding substantially positive elasticities are shown to suffer from a bias related to the timing of instrumental variables.
ER  -