The Normal Income Hypothesis in Chile

Roger R. Betancourt , Journal of the American Statistical Association 66(334) , 258-263 , June 1971.

This study attempts to discriminate between two of the main alternative explanations of consumption behavior, the normal income hypothesis and the current income hypothesis, with data from a survey of Chilean households. The results support the normal income hypothesis but reject the secondary hypothesis that the normal income elasticity of consumption is unity. A review of other results using comparable testing procedures and data is provided.

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