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Administrative data are increasingly being used to study inequalities in education. Yet a well-known difficulty with such resources is the limited information they hold. A commonly used proxy for children coming from a low-income background is their eligibility for free school meals, yet this is likely to be of little use in measuring academic achievement amongst middle and high-income groups. This study adds to the literature by showing how eligibility for free school meals – averaged over the time a child has spent at school – is the best available proxy for low income during childhood. In contrast, creating a continuous index combining free school meal eligibility with information on the neighbourhood in which they live represents the best way of comparing educational outcomes across children from low, average and high-income backgrounds. [ABSTRACT FROM AUTHOR]

Unemployment is one of the problems of Filipinos, which affects their consumption of goods and services since they have no income, worsened by the increasing prices in the market. Here, they tend to acquire consumer loans to support their means in obtaining their needs and wants, but due to the acquisition of previous loans and obligations to pay, they tend to adjust their consumption. Embedded from the Life-Cycle Hypothesis, Permanent Income Hypothesis and Keynesian Consumption Theory, the main objective of the research was to identify the relationship of unemployment, consumer loans per capita, real gross domestic product per capita, and inflation rate with the real household final consumption expenditure per capita in the Philippines using Ordinary Least Squares (OLS) in multiple regression analysis, and diagnostic tests in Eviews software using empirical time-series quarterly data from 2009 to 2019. This research found that unemployment and consumer loans per capita have an indirect relationship with the consumption of Filipinos. On the other hand, the gross domestic product per capita has a direct relationship. This claimed that all variables are significantly related to consumption except the inflation rate, although it showed an indirect trend. The findings exposed that Filipinos adjust their consumption to cope with no income due to unemployment, acquisition of consumer loans, and inflation rate to attain their needs and wants while having income increases their consumption. This research recommended that the Philippine government support the unemployed Filipinos by providing insurance or benefits, lessening the lending interest rate of loans, and overseeing the market prices to aid their consumption. [ABSTRACT FROM AUTHOR]

In contrast to the findings of simple rational expectations permanent income hypothesis models, empirical studies show that income changes can help predict consumption change. This is dubbed as excess sensitivity in the macroeconomic literature. We use Iranian household data to investigate the excess sensitivity using civil servant status as a proxy for borrowing constraints. We observe that the excess sensitivity is different among different panels. Much less excess sensitivity is observed for government employees who have better access to finance due to the structure of the labour market and banking system in Iran. Our proxy variable to divide data, which is the working status of the head of the household, does not suffer from endogeneity problems evident in the previous literature. The results of this study indicate that the actual consumption profile of a constrained household is suboptimal and hence deepening financial access can decrease the welfare loss of this suboptimality. [ABSTRACT FROM AUTHOR]

This paper tests the prediction of the permanent income hypothesis (PIH) that news about future income induce a revision in consumption equal to the revision in permanent income. We use time-series data from 48 contiguous U.S. states to perform the test. The empirical results provide some support for the PIH across states. [ABSTRACT FROM AUTHOR]

We offer a partial equilibrium perspective on the behavior of consumption in dynamic stochastic general equilibrium (DSGE) models. We consider a benchmark dynamic general equilibrium model and show that a standard calibration implies that the real interest rate is essentially fixed. One manifestation of this feature is that, with separable preferences, the reaction of consumption to total factor productivity (TFP) shocks is flat: the random‐walk permanent income hypothesis holds almost exactly, pretty much as in a partial equilibrium consumption‐savings problem. These results help explain the prominent role of aggregate demand, and how it is achieved, in modern DSGE analysis. [ABSTRACT FROM AUTHOR]

Using a unique long-run panel of Japanese households, this paper examines the changes in consumption at retirement ('the retirement-consumption puzzle'). Our analysis shows that households' expenditure does decline after the retirement of the household head and that changes in household composition at retirement cannot fully account for this decline. Changes in life-style/preferences after retirement also do not appear to explain a salient feature of the expenditure decline, namely, the strong correlation between the magnitudes of the expenditure decline and the income decline upon retirement. On the other hand, our finding that the expenditure decline is larger for households with smaller savings and/or that experienced a large unexpected income decline is broadly consistent with the standard LC/PIH augmented with unexpected shocks, while it does not rule out the possibility that there is a relatively small subset of households that are myopic and lack sufficient saving discipline. [ABSTRACT FROM AUTHOR]

The article discusses the framework of life-cycle-permanent income hypothesis (LC-PIH) associated with liquidity constraints in the study of consumer behavior in the U.S. It is explained that one of the most debated topics in the study of consumer behavior is the validity of the LC-PIH. The article reports that empirical tests of the LC-PIH have shown that the model is not able to account for the behavior of all households. In the article the Survey of Consumer Finances and the Michigan Panl Study of Income Dynamics are used to derive estimates of the proportion of consumers who are liquidity constrained between the years 1969 and 1982.

The author focuses on the article "The Permanent Income Theory of Consumption: A Restatement," by Michael R. Darby. He states that Darby's estimates suffer from a significant serial correlation problem and that the estimates of current income weight and permanent income generating function would vary significantly with the chosen measure of consumption, which invalidates Darby's two primary hypotheses. He suggests that by using a nonlinear Zellner estimation method, estimates would be consistent across the measures of consumption and sample periods. He states that estimating permanent income versions of consumption function using the grid search method was inferior to nonlinear estimation due to its instability across consumption measures and sample periods.

The article discusses the proportionality of the consumption reaction to income changes through the permanent income hypothesis (PIH). PIH assumes there is no impact from transitory income on consumption and therefore claims there is a delay for policy impacts that are meant to affect consumption when using changes in income. Such a claim, however, only applies to consumption expenditures and it is not known how it may affect the transmission mechanism of economic theory. Also, the PIH is compared to short run effects of monetary change on income.

This article presents extensions to the debate surrounding actual and permanent-income consumption modeling, addressing distinctions between the nondurable consumption patterns of heterogenous agents and the possible application of the microeconomic near-rationality model of Akerlof-Yellen for aggregate consumption dynamics analysis. Empirical testing of the model is provided, evaluating its short-run behavior accuracy and the size of its utility losses. The model's particular ability to correct for observed smoothness of wealth innovation consumption functions and sensitivity to lagged income changes is also cited.

The article focuses on the demand for money and the choice of a permanent income estimate. The test results of a permanent income hypothesis of the demand for money have been used to evaluate the appropriateness of alternative short and long run demand formulations. In this article the results show that in Canada the choice of a permanent income estimate effects the properties of the money demand function of the permanent income hypothesis.

The article examines the tests of the permanent income theory with continuous budgets. It is explained that the primary problem in testing the permanent income theory has been the absence of data giving for each household income and consumption over many years. In the article researchers have been able to obtain two small samples of such five-year income and consumption data, and have used them for a series of tests of the permanent income theory. The tests have resulted in a rejection of the proportionality hypothesis and the hypothesis of a long lag. The data presented in the article measures consumption in the conventional way, which means the researchers include the purchase rather than use of durables in consumption.

Using new transaction data, I find considerable deviations from consumption smoothing in response to large, regular, predetermined, and salient payments from the Alaska Permanent Fund. On average, the marginal propensity to consume (MPC) is 25% for nondurables and services within one quarter of the payments. The MPC is heterogeneous, monotonically increasing with income, and the average is largely driven by high-income households with substantial amounts of liquid assets, who have MPCs above 50%. The account-level data and the properties of the payments rule out most previous explanations of excess sensitivity, including buffer stock models and rational inattention. How big are these "mistakes?" Using a sufficient statistics approach, I show that the welfare loss from excess sensitivity depends on the MPC and the relative payment size as a fraction of income. Since the lump-sum payments do not depend on income, the two statistics are negatively correlated such that the welfare losses are similar across households and small (less than 0.1% of wealth), despite the large MPCs. [ABSTRACT FROM AUTHOR]

Permanent income (PI) is an enduring concept in the social sciences and is highly relevant to the study of inequality. Nevertheless, there has been insufficient progress in measuring PI. We calculate a novel measure of PI with the German Socio-Economic Panel (SOEP) and U.S. Panel Study of Income Dynamics (PSID). Advancing beyond prior approaches, we define PI as the logged average of 20+ years of post-tax and post-transfer (“post-fisc”) real equivalized household income. We then assess how well various household- and individual-based measures of economic resources proxy PI. In both datasets, post-fisc household income is the best proxy. One random year of post-fisc household income explains about half of the variation in PI, and 2-5 years explain the vast majority of the variation. One year of post-fisc HH income even predicts PI better than 20+ years of individual labor market earnings or long-term net worth. By contrast, earnings, wealth, occupation, and class are weaker and less cross-nationally reliable proxies for PI. We also present strategies for proxying PI when HH post-fisc income data are unavailable, and show how post-fisc HH income proxies PI over the life cycle. In sum, we develop a novel approach to PI, systematically assess proxies for PI, and inform the measurement of economic resources more generally. [ABSTRACT FROM AUTHOR]

Recent empirical work shows large consumption responses to house price movements. This is at odds with a prominent theoretical view which, using the logic of the permanent income hypothesis, argues that consumption responses should be small. We show that, in contrast to this view, workhorse models of consumption with incomplete markets calibrated to rich cross-sectional micro facts actually predict large consumption responses, in line with the data. To explain this result, we show that consumption responses to permanent house price shocks can be approximated by a simple and robust rule-of-thumb formula: the marginal propensity to consume out of temporary income times the value of housing. In our model, consumption responses depend on a number of factors such as the level and distribution of debt, the size and history of house price shocks, and the level of credit supply. Each of these effects is naturally explained with our simple formula. [ABSTRACT FROM AUTHOR]

The sensitivity of housing demand to income changes has important implications for the evolution of housing affordability and the behavior of urban households. In Hong Kong, investigations into this issue have shown the increasing importance of the private rental housing market, which is regarded as suboptimal and to contribute to gentrification and inequality problems. Using microdata from four waves of Hong Kong census data between 1996 and 2011, this paper aims to estimate the income elasticity of demand for private rental housing. A permanent income model was adopted to isolate permanent income and transitory income at household level. Then, the Heckman two-stage procedure was used to correct selection bias and the quantile regression (QR) approach was used to investigate the heterogeneity of demand elasticities across different tiers of housing expenditure. The empirical results showed that the permanent income elasticities fell within a range of 0.536–0.698 and transitory income shock had a positive and significant impact on the demand for rental housing. Moreover, a U shape of permanent income elasticity across the whole distribution of housing expenditure was revealed. Households in both the upper and lower tiers were more sensitive to permanent income changes, with the higher tier of households being more sensitive to transitory income shocks. These findings not only shed light on the long-term movement and cross-sectional heterogeneity of housing demand in the private rental housing market, but also have implications for studies of the rental housing demand in other developed cities. [ABSTRACT FROM AUTHOR]

We study the effect of birth weight on long-run outcomes using data on Swedish twins born between 1926 and 1958 linked to administrative records spanning entire life-time labor market histories. We find that birth weight positively affects permanent income and income across large parts of the lifecycle. The timing of the birth weight-income relationship is in line with the role of birth weight in determining takeup of sickness benefits and morbidity. The effect of birth weight on labor market outcomes even for cohorts born 30 years apart are similar; for short run health outcomes, birth weight plays a decreasing role over time. [ABSTRACT FROM AUTHOR]

The article provides a platform for research that confronts the goal of economist Ragnar Frisch to provide explicit economic interpretations for how current-period shocks alter economic time series in current and future time periods . Topics discussed include rational expectations econometrics, consumption and permanent income, consumption and asset pricing, and imperfections in financial markets.

Monetary uncertainty may cause the demand for money to increase or the velocity of money to fall. This is the so-called Friedman's hypothesis. This hypothesis has received mixed empirical support in the literature, thereby necessitating further examination. An important issue in the literature is that the existing studies have mainly focused on developed economies when testing Friedman's hypothesis. The few studies focusing on developing countries have mainly tested the stability of the demand for money function. However, how monetary uncertainty determines the behaviour of the demand for money function is equally important. In this paper, we tested Friedman's hypothesis by focusing on a developing country, thereby adding to the existing literature. Using a technique which allows us to differentiate short-run impact from long-run impact, we examined the impact of monetary uncertainty on the money demand in Ghana during the period 1990Q1 to 2016Q3. In addition, we assessed the stability of the demand for money function in this country. We found that monetary uncertainty has a negative and significant impact on the demand for money in both the short and the long run. This finding refutes Friedman's hypothesis. The implication of this finding is that the public prefers to hold safer assets to cash money during periods of monetary uncertainty in Ghana. Finally, we found evidence in support of a stable demand for money function in Ghana. One implication of the stable demand for money function in the country is that monetary policy aimed at smoothing the growth rates of monetary aggregates could enhance the stability of the economy by ruling out monetary policy as a source of uncertainty. The other is that, because a stable demand for money function implies the demand for money changes in a predictable fashion, the central bank may be able to achieve the objectives of the inflation-targeting framework that it is currently practising. [ABSTRACT FROM AUTHOR]

This study investigates changes in household consumption at retirement based on a comprehensive, diary-based household survey from China. We focus on disentangling price changes from quantity changes at retirement. The mandatory retirement policy in China provides a quasi-experimental setting for nonparametric identification of the true causal effects of fully anticipated retirement. Using a regression discontinuity design, we find that food expenditure declines at retirement, particularly among the less-educated group. We further show that this decline is driven by a reduction in prices rather than quantities. These findings, along with a documented increase in shopping time for food upon retirement among the less-educated households, are consistent with a time allocation model in which education enhances the value of leisure. ( JEL J26, C21) [ABSTRACT FROM AUTHOR]

Summary Studies that examine the long-run impact of remittances on economic growth in West Africa and the Caribbean show that remittances are not growth enhancing. Money has been used toward consumption rather than investment. Because migrants from these regions are mostly permanent immigrants who settle in the host countries, we ask if there is a difference for South Asia where migrant workers are flooding for short-term, temporary contracts in the Middle Eastern countries. The permanent income hypothesis states that a permanent increase in income raises current consumption while transitory income increase is saved or smoothed over a life time. We argue that the transitory income remitted by short-term migrants is invested to generate future income when they return. We examine a panel data of five South Asian countries—Bangladesh, India, Nepal, Pakistan, and Sri-Lanka—for a period from 1975 to 2011. Using panel cointegration and Pooled Mean Group (PMG) estimation of dynamic heterogeneous panels, we show that there is a long-run significant impact of workers' remittances on income while the impact on consumption is not significant. A one-percent increase in remittance receipt per person raises per-capita income by approximately 0.23%. The results are robust across different tests. [ABSTRACT FROM AUTHOR]

One of the purposes of the unconditional cash transfer program (Bantuan Langsung Tunai/BLT) was to help the poor and near-poor households to fulfill their basic needs. This study attempted to identify the impact of the BLT on cigarette consumption in society; as it is well known that smoking has more disadvantages than benefits. The study used data from the Indonesian Family Life Survey (IFLS) 2000 and 2007 to capture the impact of the BLT on the cigarette consumption of households. By controlling for the characteristics of the respondents, and using the fixed effect at household and village level as an estimation technique, the empirical results showed that in general there was a changing pattern of cigarette consumption in Indonesian society, to which the BLT program has contributed. By influencing the savings of households, the BLT program has significantly decreased cigarette consumption in Indonesia. It could be explained by the permanent income hypothesis, where the BLT transfer can be categorized as a transitory income in that hypothesis. This study can be an input and consideration for the transfer policy's implementation in Indonesia in particular. [ABSTRACT FROM AUTHOR]

Little is known about the mental health of female sex workers and women living with HIV/AIDS in the Dominican Republic, which impedes HIV prevention, testing, and treatment. This project estimates the prevalence of depression and identifies key contributing factors to this outcome in female sex workers, women living with HIV/AIDS, and a comparison group. Participants were female sex workers (N = 349), women living with HIV/AIDS (N = 213), and a comparison group of HIV-negative women who were not sex workers (N = 314) from the Dominican Republic. Participants completed questionnaires assessing demographic characteristics and depression. Female sex workers and women living with HIV/AIDS completed additional questionnaires ascertaining HIV or sex work-related internalized stigma. Depression was prevalent among female sex workers (70.2%), women living with HIV/AIDS (81.1%), and the comparison group (52.2%). Adjusted logistic regressions showed that internalized stigma was associated with depression for female sex workers (OR = 2.73; 95% CI = 1.95-3.84) and women living with HIV/AIDS (OR = 3.06; 95% CI = 1.86-5.05). Permanent income was associated with this outcome for female sex workers (OR = 0.08; 95% CI = 0.01-0.80) and the comparison group (OR = 0.04; 95% CI = 0.00-0.45). [ABSTRACT FROM AUTHOR]

This paper studies the transitional dynamics of the linear-quadratic consumption model and reexamines existing analyses of the permanent income hypothesis (PIH). The model accounts for the life-cycle consumption behavior, with the short-run and long-run consumption functions linking consumption to wealth. We show that the random walk model of consumption violates the relevant stability condition and delivers predictions that are inconsistent with the PIH. We find that while excess sensitivity may be due to liquidity constraints, it can also arise in accordance with the PIH in perfect capital markets − contrary to the prevailing view. Simulation experiments prove useful to explain the observed consumption behavior. [ABSTRACT FROM AUTHOR]

Because tuition payment comprises a large proportion of expenses in households with children in universities, it causes large and clearly predictable changes in discretionary income in predetermined months. This study examines consumption smoothing for those households as an alternative test of the life-cycle/permanent income hypothesis, using the Japanese Family Income and Expenditure Survey. We show that a one yen decrease in discretionary income due to tuition payment is associated with 0.1-0.2 yen decrease in non-tuition spending in the month of tuition payment, showing that those households are not engaged in consumption smoothing. [ABSTRACT FROM AUTHOR]

We document that nonrich households consume a larger share of their current income when exposed to higher top income and consumption levels. Permanent income, wealth effects, and upward local price pressures cannot provide the sole explanation for this finding. Instead, we show that the budget shares that nonrich households allocate to more visible goods and services rise with top income levels, consistent with statusmaintaining explanations for our primary finding. Nonrich households might have saved up to 3% more annually by the mid-2000s had incomes at the top grown at the same rate as median income since the early 1980s. [ABSTRACT FROM AUTHOR]

This paper is an application of the consumption-smoothing current account theory the main principles of which appeared in the 1980s and gradually broadened to describe the intertemporal dynamics of important economic processes. In open economies, the consumption-smoothing current account process is related to the consumption behaviour of households. The effect on consumption choices and the current account is derived from the premise that households adjust their consumption expenditures according to the terms of trade. The process can be treated in an optimizing framework and originally was strictly connected to the permanent income hypothesis (PIH) and no restrictions to capital mobility. Both assumptions were successively relaxed and relationships allowing incorporation of the excess sensitivity hypothesis (ESH) and not perfect capital mobility have been introduced. Transformed into a VAR model with current account and national cash flow increments as endogenous variables, relevant conclusions are drawn on the basis of Granger causality, the equivalence of the current and predicted current account and an analysis of parameters of the model. Basic relationships and solutions are summarized and an application using the economies of the Czech Republic, Slovakia and Austria follows. [ABSTRACT FROM AUTHOR]

We provide a new explanation for the stronger relationship between income and subjective wellbeing (SWB) found in cross-sectional versus panel studies based on the predictions of a rational expectations model of utility maximization with permanent and transitory income shocks. The model predicts that SWB is affected by unanticipated rather than anticipated income shocks, and is more influenced by permanent rather than transitory income shocks. We confirm the model predictions empirically by analyzing panel data from China, and show that differences in the relative importance of permanent income can explain the stronger (weaker) impact of income often found in cross-sectional (panel) estimation. We also empirically confirm asymmetric impacts of positive and negative transitory income shocks as predicted by a model with credit constraints. [ABSTRACT FROM AUTHOR]

This paper provides a micro-analysis of the long-term impacts of a particular historical event: the Cultural Revolution in urban labor market of China. Using the life-cycle models and synthetic cohort approach, I demonstrate that the Cultural Revolution produced a lasting negative effect on permanent income for the subjected birth cohorts and this effect was amplified from the middle 1990s to the early 2000s as the Chinese market economy increasingly evolved. Channels in the mechanism of the impact includes productivity determinants (educational attainment, work experience, and health), marriage, and personality. The conclusions are robust to a variety of controls for family background as well as contamination factors, examinations with various control groups, contemporaneous comparisons, and placebo tests. [ABSTRACT FROM AUTHOR]

The consumer is that trader responsible for consumption act of some final goods or services who decided what must be produce and in what cantity, being the one who make the economic mechanism to move. Consumption is in close connection with the production of goods and services, exerting an active role, any activity should be complete by consuming its results; consumption creates the motivation to achieve economic and non-economic activities. The traditional approach to consumer behavior starts from hypothesised that all consumers seek to maximize the aggregate utility obtained of satisfactions resulting from consumption of goods taking into account the budgetary constraints given by income that consumer has and the prices of these goods. In the conditions of modern economy, consumption can be increased by diseconomies. If consumption depends on permanent income, revenue growth effectively does not exert influence on consumption only to the extent that this increase of income leads to increasing permanent income consumer. Consumption is viewed as an active agent of economic life, it is not only a consumer of goods and services but also a producer. [ABSTRACT FROM AUTHOR]

In this article, we first measure the potential welfare gains from perfect risk sharing among Australian states and New Zealand regions under possible unification. We show that New Zealand regions reap moderate gains from perfect risk sharing when they form a union with Australia, whereas for Australian states, the gains are somewhat similar to what they have attained at the intranational level. Second, we measure the extent of interstate risk sharing and intertemporal smoothing between the two countries. We are able to observe a substantial degree of intertemporal smoothing among Australian states and New Zealand regions, either alone or jointly, thus confirming the permanent income hypothesis. Further, unique to the risk-sharing literature, we decompose the aggregate (nondiversifiable) output shocks into positive and negative components, in order to assess the strength of risk-sharingmechanisms across business cycles. The study finds a virtual absence of risk sharing when Australia and New Zealand face negative aggregate fluctuations, raising doubts about the feasibility of the union, particularly during economic downturns. (JEL F41, F36) [ABSTRACT FROM AUTHOR]

This study examines the relationship between air quality and life satisfaction. Moreover, a panel structural equation modelling (SEM) is applied in order to capture the causal effect of permanent income on life satisfaction. Swiss Household Panel (SHP) Survey (2000-2013), which is a detailed micro level survey, is used for the analysis controlling for personal and household characteristics. Five air pollutants are examined in the entire analysis; ozone (O3), particulate matter (PM), carbon monoxide (CO), sulphur dioxide (SO2) and nitrogen dioxide (NO2). Furthermore, the marginal willingness-to-pay (MWTP) values for reducing air pollution are calculated. For the robustness checks, the SEM estimates are compared with those derived by the adapted Probit Fixed Effects (FE) model. Overall results show that MWTP values are higher for SO2 followed by O3 and NO2, while the lowest values are reported for CO and PM10. Moreover, it is found that the permanent income has a positive significant effect on life satisfaction. However, considering the SEM estimations, findings for the income effects on life satisfaction are stronger than those found from the adapted Probit FE estimates that lead to lower MWTP values. [ABSTRACT FROM AUTHOR]

This paper investigates whether education and working in a physically demanding job causally impact temporary work incapacity (TWI), i. e. sickness absence and permanent work incapacity (PWI), i. e. the inflow to disability via sickness absence. Our contribution is to allow for endogeneity of both education and occupation by estimating a quasi-maximum-likelihood discrete factor model. Data on sickness absence and disability spells for the population of older workers come from the Danish administrative registers for 1998-2002. We generally find causal effects of both education and occupation on TWI. Once we condition on temporary incapacity, we find again a causal effect of education on PWI, but no effect of occupation. Our results confirm that workers in physically demanding jobs are broken down by their work over time (women more than men) but only in terms of TWI. [ABSTRACT FROM AUTHOR]

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We consider a long-term board of directors-CEO relationship, where the firm's performance depends on the CEO's productive effort and where the CEO can be involved in earnings manipulation (EM). An agency-based two-period model is built and analyzed. The CEO pay includes a bonus and stock options. CEO gets stock options if the short-term earnings achieve some threshold. If EM is costly, CEO overinvests in production effort that increases the probability of getting stock options. If EM is possible, CEO production effort is closer to socially optimal level. The opportunity to manipulate earnings protects the CEO against the risk of a low payoff when the results of production are below expectations. Optimal contract trades-off social loss from EM and improved incentives for productive effort. In equilibrium some degree of EM can be optimal. We also find that EM should more frequently be observed among managers with low outside opportunities. [ABSTRACT FROM AUTHOR]

The article discusses research on the usefulness of comprehensive income and other comprehensive income (OCI). Topics dicussed include transitory items in determination of permanent income which include ability to self-predict, prediction of next-period total income, and value relevance. It also mentions capital market metrics such as prices and returns.

This study evaluates how managers of Australian firms are implementing the regulation requiring the impairment of assets and whether asset impairments can be categorised as non-discretionary. We find some evidence that realised asset impairments are reflective of regulatory requirements. However, for the majority of firms exhibiting at least one externally observable indicator of impairment, they are not recognising asset impairments, and recognition is often delayed. Accordingly, while realised asset impairments might be categorised non-discretionary, the timing of their recognition appears highly discretionary. There is some evidence that the realisation of asset impairments increased subsequent to transition to IFRS; however, the majority of firms with indicators of impairment are still not recognising asset impairments. [ABSTRACT FROM AUTHOR]

The article discusses audit costs of the International Financial Reporting Standards (IFRS) and differential impact of implied auditor cost structures in New Zealand. Topics discussed include evaluation on the impact of IFRS adoption in audit payments, expansion of period subsequent to IFRS adoption, and the importance of the International Auditing Standards.

The life cycle/permanent income hypothesis (LCPIH) entails two postulates: People have rational expectations and people do not have problems with self-control. If either or both of these postulates do not apply, we cannot obtain a testable implication for the LCPIH. We use Japanese representative panel data that include responses to self-reported and retrospective questions in order to elicit behavior such as forward-looking and self-control problems. We test the rational expectations hypothesis and the LCPIH implication and find that rational consumers do not change their expenditure in response to expected income changes, which we restrict to fit the two LCPIH postulates. [ABSTRACT FROM AUTHOR]

The aim of this study is to find the impact of inflation on savings. Primary data were collected through Questionnaire, which was administered in 300 individual consumers of different demographics. Data was analyzed through Correlation, One-way ANOVA and Independent T-Test. The findings showed that the inflation affects lower class more than middle class consumers. Impact of occupation is different for inflation: Labor & Retried consumers are affected more by inflation as compared to Govt. employees, Private employees and Business/Agriculture consumers. Findings also showed that Inflation decreases not only permanent income but also transitory income. Impact of occupation is different for permanent as well as transitory income. The mean score of Labor, Retried consumers on permanent and transitory income is less than the government employees, Private employees and Business/Agriculture consumers. Findings also showed that Inflation decreases savings and the impact of occupation is also different for savings. Labor & Retried consumers save less as compared to Govt. employees, Private employees and Business/Agriculture consumers. This research has implications for consumers, producers as well as for policy makers. [ABSTRACT FROM AUTHOR]

This paper provides new evidence on the long-standing question of whether more affluent households save a larger fraction of their income. The major difficulty in empirically assessing the relationship between incomes and saving rates is to construct a credible proxy for long-run income--purged of transitory fluctuations and measurement error. The Canadian Family Expenditure Survey provides us with both unusually good data on savings rates and potential predictors with which we can construct reliable long-run income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and long-run incomes is sensitive to the predictor used to proxy long-run income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across predicted long-run income groups. [ABSTRACT FROM AUTHOR]

This paper studies the aggregate dynamics of durable and nondurable consumption under slow information diffusion (SID) due to noisy observations and learning within the permanent income hypothesis framework. We show that SID can significantly improve the model's predictions on the joint behavior of income, durable consumption, and nondurable consumption at the aggregate level. Specifically, we find that SID can significantly improve the model's predictions for: (i) smoothness in durable and nondurable consumption, (ii) autocorrelation of durable consumption, and (iii) contemporaneous correlation between durable and nondurable consumption. [ABSTRACT FROM AUTHOR]

In this paper we examine the consumption behavior of a single twentieth-century economist (Bodkin) over the course of his academic career. We find that the consumption behavior of Bodkin, a long-time student of the consumption function, does not conform to any of the standard models over the entire 1958-2000 period. Instead, we observe a shift from 'Keynesian' to life-cycle behavior in response to a court decision that changed Bodkin's long-term employment income prospects, a finding that lends support to the arguments of Katona and Akerlof that the effect of psychological factors on consumption cannot be ignored. [ABSTRACT FROM AUTHOR]

The intention in this study is to investigate the effects of different socio-economic factors on the probability of home purchases, focusing on the Çankaya and Yenimahalle districts of Ankara. To this end, an extended Cox regression analysis was undertaken using data garnered during an interview survey with a group of new home buyers in these districts. The results of the Cox regression analysis reveal that the probability of home purchase is significantly related to the method of housing acquisition, the level of education of both the head of the household and partner, the total number of children and whether or not the household has school-aged children. The results of the analysis also revealed that most of the factors that have been found to be significant in previous literature, such as the permanent income and the employment status of the household, had no significant influence on the likelihood of the surveyed households purchasing homes. Rather, the data derived from the household survey shows that household assets, such as ownership of land, is one of the most important sources of home financing, especially for lower income groups. Accordingly, no systematic relationship can be identified between permanent income and home purchase in this study, and the current Mortgage Law is unable to address the deficiency in this area, given that housing credits are out of reach of the low to moderate income groups due to the associated high interest rates. [ABSTRACT FROM AUTHOR]