Campbell, JohnMankiw, N2009-10-211990Campbell, John Y., and N. Gregory Mankiw. 1990. Permanent income, current income, and consumption. Journal of Business and Economic Statistics 8(3): 265-279.0735-0015http://nrs.harvard.edu/urn-3:HUL.InstRepos:3353762This article reexamines the consistency of the permanent-income hypothesis with aggregate postwar U.S. data. The permanent-income hypothesis is nested within a more general model in which a fraction of income accrues to individuals who consume their current income rather than their permanent income. This fraction is estimated to be about 50%, indicating a substantial departure from the permanent-income hypothesis. Our results cannot be easily explained by time aggregation or small-sample bias, by changes in the real interest rate, or by nonseparabilities in the utility function of consumers.en-USinstrumental variablesEuler equationMonte Carlo studynonseparable utilityreal interest ratetime aggregationJournal Article2009-10-2110.2307/1391964