Template-Type: ReDIF-Paper 1.0
Author-Name:  Fábio Augusto Reis Gomes
Author-Name-First: Fábio Augusto Reis
Author-Name-Last: Gomes
Author-Name:  Douglas de Souza Franchini
Author-Name-First: Douglas de Souza
Author-Name-Last: Franchini
Title: The Stationarity of Consumption–Income Ratios: Evidence from South American Countries
Abstract:  The aim of this paper is to analyze the order of integration of the consumption–income ratio in 10 South American countries. To fulfill this purpose, the individual ADF test, its panel versions [Maddala and Wu (1999) and Choi (2001)] and the Minimum LM unit root test with structural break(s) [Lee and Strazicich (1999, 2003)] were employed. While the former tests found more favorable evidence to an integrated process, after controlling for structural breaks only Uruguay seems to be integrated. Thus, in general, the consumption-income ratio was diagnosed as a stationary process, as suggested by the relative income hypothesis, the habit persistence model, the permanent income hypothesis and the life cycle hypothesis. 
Length:  25 pages
Creation-Date:  2008
Order-URL: https://repositorio.insper.edu.br/handle/11224/5792
File-URL: https://repositorio.insper.edu.br/handle/11224/5792
File-Format: text/html
File-Function: Full text
Number: 021
Handle: RePEc:aap:wpaper:021