Journal Article

Estimating intertemporal elasticity of substitution: the case of log- linear restrictions

Abstract: Are linear regression models reliable in testing whether high expected real interest rates encourage current savings and deferred consumption? Here, a Monte Carlo test shows that a linear model yields a fairly accurate estimate and small standard error, but is highly susceptible to specification bias.

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Economic Review

Publication Date: 1989

Volume: 76

Issue: Nov

Pages: 3-14