TY  - JOUR
AU  - Miron,Jeffrey A.
TI  - Seasonal Fluctuations and the Life Cycle-Permanent Income Model of Consumption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1845
PY  - 1987
Y2  - May 1987
UR  - http://www.nber.org/papers/w1845
L1  - http://www.nber.org/papers/w1845.pdf
N1  - Author contact info:
Jeffrey A. Miron
Department of Economics
Harvard University
Cambridge, MA 02138
Tel: 781/856-0086
Fax: 617/495-8570
E-Mail: miron@fas.harvard.edu
AB  - Recent empirical work has found that both aggregate and micro data reject the rational expectations version of the Life Cycle-Permanent Income model of consumption. This paper examines a new possible explanation for the rejections: the treatment of seasonal fluctuations. There are substantial seasonal fluctuations in consumption purchases, but no previous paper has determined whether these fluctuations are consistent with the Life Cycle-Permanent Income model. The results in this paper show that when the seasonal fluctuations in consumption purchases are included in an analysis of the Life Cycle-Permanent Income model there is no evidence in the aggregate data against the model. The estimates of the parameters of agents' utility functions obtained here are plausible, and the data do not reject the overidentifying restrictions on the model.
ER  -