RATIONAL-EXPECTATIONS, SAVING AND ANTICIPATED CHANGES IN INCOME - EVIDENCE FROM MALAYSIA AND SINGAPORE

Authors
GAN WB SOON LY
Citation
Wb. Gan et Ly. Soon, RATIONAL-EXPECTATIONS, SAVING AND ANTICIPATED CHANGES IN INCOME - EVIDENCE FROM MALAYSIA AND SINGAPORE, Journal of macroeconomics, 16(1), 1994, pp. 157-170
Citations number
31
Categorie Soggetti
Economics
Journal title
Journal of macroeconomics → ACNP
ISSN journal
01640704
Volume
16
Issue
1
Year of publication
1994
Pages
157 - 170
Database
ISI
SICI code
0164-0704(1994)16:1<157:RSAACI>2.0.ZU;2-U
Abstract
The paper tests a version of the rational expectation permanent income hypothesis model for Malaysia and Singapore. The empirical results in dicate that current saving correctly anticipates future changes in inc ome. However, the test results also show that changes in consumption a re predictable on the basis of known information. In addition, actual consumption in both countries are ''excessively sensitive'' to fluctua tions in current income.