Some evidence on the influence of income uncertainty on aggregate consumption

Recent theory suggests uncertainty in income influences consumption expenditures. With disposable income modeled as a random walk plus drift, an econometric technique for estimating the moments of a dependent variable is used to test this hypothesis by producing a series of consistent estimates of the variance of disposable income. Using quarterly post-World War II data and a well-known specification of the consumption function, the standard deviation of income has a negative and statistically significant influence on consumption. The influence of the standard deviation of income on consumption is of the same order of magnitude as that of contemporaneous wealth on consumption.     

Explaining intergovernmental grants: Australian evidence

… the Dodo suddenly called out, ‘the race is over!’ and they all croded round it panting, and asking, ‘But who has won?’

Lewis Carroll Alice's Adventures in Wonderland     

Divisia moments of Australian consumption

Quarterly Australian consumption data, 1959–1978, are used to compute Divisia price and quantity indexes, together with Divisia variances and covariances. The quantity variances tend to exceed the price variances, and the price-quantity covariances are mostly negative. Estimates of the income flexibility are also presented.     

The Hazards of Starting and Quitting Smoking: Some Australian Evidence

The empirical analysis employs individual level data from the Australian Health Survey combined with retrospective data on tobacco price matched to the age at which the individual started and quit smoking. Split-population hazard models are estimated for both starting and quitting smoking. The analysis suggests price plays a significant role in the decision to start smoking but not in the decision to quit. Further sensitivity analysis of different age groups and an alternative data source, questions the robustness of the significant role of price in the smoking initiation decision. From a policy perspective, the results indicate that increases in tobacco taxation can be an important instrument in reducing the incidence of smoking, but should be combined with other mechanisms such as mandating smoke-free environments and antismoking education. Our results strongly support the targeting of antismoking campaigns towards teenagers.     

Happiness and consumption: evidence from China

Using the 2012 China Household Finance Survey, this study finds that happiness in China is positively associated with expenditures on status-related and socially motivated goods, not with spending on improving material well-being or primarily intended for procuring material goods. It also reveals that socially motivated consumption has a status element and the effects of different types of consumption on happiness vary with people’s educational background.     

Unions,innovation and investment: Australian evidence

Machin and Wadhwani have produced evidence indicating that trade unions encourage investment in the UK. This paper uses comparable data to ascertain whether their finding holds with respect to Australia. In general, and contrary to the UK study, the net effect of unions on investment in Australia is found to be negative. Nevertheless, investment levels at workplaces where unions were active were above the levels at non-union workplaces, offering support for the union-voice hypothesis which Machin and Wadhwani use to explain their results.     

The demand for football: Some evidence on outcome uncertainty

This paper analyses the determinants of match attendances in the English Football League using an improved measure of match outcome uncertainty based on the probability of home team success. Explicit allowance is made for the level of core support as well as the potential non-linearities associated with home team success. The report results are striking and generally robust across all four divisions of the English Football League.     

Net liquid assets and net illiquid assets in the consumption function: Some evidence for the United Kingdom

This note reports details of estimating consumption equations for the United Kingdom which separate net wealth into net liquid assets and net illiquid assets. The estimation framework is related to that in the influential article by Hendry and von Ungern-Sternberg (1981), but recognises the importance of defining income to allow not only for inflation induced losses but also for depreciation provisions. The empirical results provide some support for a role for both liquid and illiquid assets in determining consumption decisions.     

The Velocity of Circulation: Some new evidence on international integration

This study tests for the integration of money velocity movements among the major European Union countries. For this purpose, a new test is employed that allows one to confirm or reject integration on the basis of whether or not the first largest principal component, based on deviations of velocity growth rates from a base country, is stationary. Using monthly data covering the last 25 years, this study finds that integration was strongest during the 1970s and during 1983-92. These findings modify the institutionalist view that common financial developments have meant that velocities have moved together on an upward secular trend over the last 40 years. Developments with regard to currency substitution along with exchange rate policy and capital controls can affect relative interest rates and income movements and therefore the co-movements in money velocities.     

The political economy of public goods: Some evidence from India

We are interested in how public goods get allocated by a centralized state. We use data on public goods and social structure from parliamentary constituencies in rural India to understand the allocation of these goods over the 1970s and 1980s. National policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure. We find evidence of considerable equalization in many of these facilities, reflecting perhaps the importance of these commitments. Among the historically disadvantaged social groups, those that mobilized themselves politically gained relative to the others. Measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance.     

The Fiscal Consequences of Privatisation: Australian evidence on privatisation by public share float

Privatisation has become a common government policy in many countries. This paper summarises the salient features of privatisations by public share float in Australia during the period 1989 to 1997. The costs associated with these privatisations are examined, including both direct costs and the opportunity cost of Australian governments selling assets cheaply. Furthermore, the impact that such sales have on the net worth of the public sector is estimated. The results suggest that there is a cost of underpricing. There is also some evidence that the effect on the public sector net worth may be negative. However, in some cases where the enterprise sold is inefficient the government may realise a gain.     

Quantitative versus qualitative measures of price expectations: The evidence from Australian consumer surveys

This letter analyses price expectations data derived from the quarterly Australian Survey of Consumers. The survey asks both qualitative and quantitative price expectations questions. The information loss arising from using the more readily available qualitative based series as approximations to the quantitative series is assessed. Qualitatively based series are found to greatly exaggerate changes in consumer price expectations in times of high inflation.     

The effect of peer observation on consumption choices: evidence from a lab-in-field experiment

We investigate the impact of peer observation on consumption decisions using a lab-in-field experiment. Respondents make consumption decisions either alone or under peer observation. We find evidence for peer effects. We are able to study these further by looking into the mechanism and performing detailed heterogeneity analysis. Concerning the mechanisms, we find evidence for an information channel. Further, we show that the consumption choice is influenced by how many people made the same decision previously, but not by who those people are, hence finding evidence of a psychological channel. Respondents with higher cognitive ability are less susceptible to peer effects, while people living in small villages are more susceptible.     

The formation of expectations: Some evidence from weekly money supply forecasts

This paper investigates the expectations formation process of weekly money supply forecasts derived from survey data. The evidence indicates that forecaster's expectations are modelled best as regressive. Moreover, the results are unaffected by the October 1979 change in monetary operating procedures.     

Agricultural research and biological productivity: Some Australian results

Data on scientific publication is used as a proxy for the intensity of research activity in a study of the influence of research on agricultural productivity. Publications are separated according to the commodity to which they are related.     

Female Earnings and Divorce Rates: Some Australian Evidence

The purpose of this article is to examine whether female earnings have influenced divorce rates in Australia, using state‐level data for the past four decades. Following a recent study by Ressler and Waters (2000), which concludes from comparable US data that female earnings and divorce rates may be jointly endogenous, initial testing is performed to identify whether female earnings can be treated as exogenous. A Hausman specification error test finds no evidence of a simultaneous relationship in the Australian data, in contrast to the findings of Ressler and Waters. The test result supports the hypothesis that other underlying factors affect female earnings, of which higher divorce rates are merely another symptom. A divorce rate equation is estimated. In accordance with much of the literature, the rise in female earnings over the past four decades is found to have increased Australian divorce rates.     

Saving and inflation: Some international evidence

This note contains empirical results for the ‘disequilibrium’ saving function specification, in which uncertainty about relative prices in a cross-section sense plays a major role. Quarterly time series evidence from several OECD countries over the period 1967(II)–1980(III) lies in striking conformity with the view - suggested particularly by Deaton - that there is a positive relationship between unanticipated inflation and the saving ratio.