Intertemporal substitution, exogeneity, and surprises: estimating life cycle models for Canada

J. G. Altonji, John Ham

Research output: Contribution to journalArticle

Abstract

We estimate consumption and labour supply models for Canada using US variables as instruments instead of lagged Canadian variables. Our results suggest that the endogeneity of lagged variables has not been a serious problem in previous studies. We also develop estimation methods for use when the agents' information sets are unknown and the model contains the realization and the innovation of an endogenous variable. We use the approach to estimate a labour supply model combining intertemporal substitution and job search and to estimate the labour supply and consumption responses to marginal utility of income changes induced by wage, price, and interest rate surprises. -Authors

Original languageEnglish (US)
Pages (from-to)1-43
Number of pages43
JournalCanadian Journal of Economics
Volume23
Issue number1
DOIs
StatePublished - Jan 1 1990

Fingerprint

Surprise
Exogeneity
Labor supply
Life-cycle model
Intertemporal substitution
Canada
Innovation
Endogeneity
Job search
Endogenous variables
Marginal utility
Interest rates
Income
Wages

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Intertemporal substitution, exogeneity, and surprises : estimating life cycle models for Canada. / Altonji, J. G.; Ham, John.

In: Canadian Journal of Economics, Vol. 23, No. 1, 01.01.1990, p. 1-43.

Research output: Contribution to journalArticle

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