Full Consumption Insurance: Evidence from 1995-1998
نویسنده
چکیده
The full consumption insurance implication of complete-markets models is tested using CEX data from 1995 through 1998. Cross-sectional tests are performed, rather than pooled time-series, cross-sectional regressions. Four different measures of consumption and two different measures of income, pre-tax and after-tax income, are used in implementing the tests. The results of the tests are not sensitive to the choice of income measure, which suggests that the U.S. tax system is not an important part of the consumption insurance mechanism, if indeed one exists at all. As has been found in previous studies, power (CRRA) utility is broadly inconsistent with the full insurance hypothesis, whereas exponential (CARA) utility is less inconsistent with the hypothesis. ∗E-mail address: [email protected].
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تاریخ انتشار 2001