Abstract
This article develops a method for testing the risk-sharing hypothesis (RSH) against various versions of the permanent income hypothesis (PIH) while allowing for heterogeneity in risk preferences across households. Using 1-year and longer differences in household total nondurable consumption data from Indian villages, we find evidence that favors the RSH over the PIH at the village level.
| Original language | English |
|---|---|
| Pages (from-to) | 421-430 |
| Number of pages | 10 |
| Journal | Journal of Business and Economic Statistics |
| Volume | 22 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2004 Oct 1 |
| Externally published | Yes |
Keywords
- Consumption smoothing
- Generalized method of moments
- Panel data
- Permanent income hypothesis
- Risk-sharing hypothesis
ASJC Scopus subject areas
- Statistics and Probability
- Social Sciences (miscellaneous)
- Economics and Econometrics
- Statistics, Probability and Uncertainty