Dynamic Panel Estimation of the Deaton Paradox
Dynamic Panel Estimation of the Deaton Paradox
Author(s): Adam Ruschka, Martin Janíčko, Helena ChytilováSubject(s): National Economy, Supranational / Global Economy, Micro-Economics, Economic history, Political history, Socio-Economic Research
Published by: Vysoká škola ekonomická v Praze - Fakulta podnikohospodářská
Keywords: Deaton paradox; panel data; clustering; variability of consumption;
Summary/Abstract: This paper estimates the presence of the Deaton paradox in Europe. Using panel data for 24 countries from 2000 to 2021, the authors estimate the presence of excess smoothness of consumption using the generalized method of moments (GMM) estimator. They cluster their dataset to lower data variability and use both quarterly and monthly data for robust estimates. Their findings indicate that traditional economic theories about consumption may not be applicable in Europe. The excess smoothness in consumption patterns provides key insights into consumer behavior, especially during periods of volatility, and indirectly corroborates newer theories in behavioral economics. This has implications for monetary and fiscal policy and is vital for business strategy, particularly in consumer-focused industries.
Journal: Central European Business Review
- Issue Year: 14/2025
- Issue No: 1
- Page Range: 75-104
- Page Count: 30
- Language: English
