International Journal of Econometrics and Financial Management
ISSN (Print): 2374-2011 ISSN (Online): 2374-2038 Website: http://www.sciepub.com/journal/ijefm Editor-in-chief: Tarek Sadraoui
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International Journal of Econometrics and Financial Management. 2017, 5(2), 33-36
DOI: 10.12691/ijefm-5-2-2
Open AccessArticle

Empirical Test of the Rational Expectations-permanent Income Hypothesis: Abel and Mishkin’s General Approach: Evidence from Algeria

Tarek DJEDDI1, , Tayeb LOUAFI2 and Said BRIKA3

1ENSSEA ex. INPS, Kolea, Algeria

2University of Larbi Tebessi, Tebessa, Algeria

3University of Laarbi ben Mhidi, Oum elbouaghi, Algeria

Pub. Date: July 05, 2017

Cite this paper:
Tarek DJEDDI, Tayeb LOUAFI and Said BRIKA. Empirical Test of the Rational Expectations-permanent Income Hypothesis: Abel and Mishkin’s General Approach: Evidence from Algeria. International Journal of Econometrics and Financial Management. 2017; 5(2):33-36. doi: 10.12691/ijefm-5-2-2

Abstract

The purpose of this paper is to test through an empirical analysis the Rational Expectations-Permanent Income Hypothesis. To do this, we referred to the General approach of Abel and Mishkin (1983). Our econometric tests are based on annual data over the period [1985-2015] related to households in Algeria. Our results show the rejection of the general approach’s model which leads to the rejection of the Rational Expectations-Permanent Income Hypothesis. As finding, Algerian households do not form rational expectations about their future income.

Keywords:
rational expectations permanent Income consumption general approach Abel and Mishkin

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