Separability and aggregate shocks in the life-cycle model of consumption: evidence from Spain

A study a consumer behavior in Spain lends support for the assumption that changes in income will have a positive effect on consumption only when the income change is permanent rather than transient. Government policies such as provision of consumer tax breaks during low-consumption periods have negligible effects on consumption. Also, fluctuations in employment status do not affect consumption. The latter observation indicates that increase of leisure time does not necessarily hike consumption levels.