What is it about?
Test Consumption optimality confronting aggregate consumption data and measures of aggregate real interest rate. Test do not reject optimality, contrary to previous results using individual measures of interest rates.
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Why is it important?
Aggregate consumption models are not simple generalizations of models for individual consumption choices. Tests have rejected aggregation on several occasions. Here, we do not observe this type of result, due to matching aggregate consumption data and measures of aggregate real interest rate.
Perspectives
We circumvent the problem of aggregation by aggregating returns directly in the equation linking asset returns and aggrgegate consumption decisions. This creates an interesting research avenue.
Joao Issler
Fundacao Getulio Vargas
Read the Original
This page is a summary of: TESTING CONSUMPTION OPTIMALITY USING AGGREGATE DATA, Macroeconomic Dynamics, January 2016, Cambridge University Press,
DOI: 10.1017/s1365100515000085.
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