|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CEE | CEP | SERC | STICERD||Cookies?|
Paper No' DARP 032: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: permanent income; prediction; determination; living standards; rural China
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: Distributional Analysis Research Programme
Share this page: Google Bookmarks | Facebook | Twitter
Abstract:This paper is about the determination and prediction of permanent income in household data. Standard static welfare indicators (e.g. per capita expenditure and income) are imperfect in this respect as they typically contain a high transitory component. The framework we employ is consistent with the permanent income hypothesis but is supplemented with a causes equation where unobservable permanent income is explicitly modelled as function of causal variables which play a key part in its determination. Simultaneous estimation of the model allows us to compare how well different standard static welfare indicators identify permanent income but more importantly enables us to predict permanent income using information contained both in the causal variables and in the standard static welfare indicators. The paper is closed by an pplication of the methodology to household data from the rual sector of two Chinese provinces.
Copyright © RLAB & LSE 2003 - 2015 | LSE, Houghton Street, London WC2A 2AE | Contact: RLAB | Site updated 30 January 2015