Dynamics of Individual Wealth Accumulation: A Use of Simulation Methods for Estimating Limited Dependent-Variables Models

This paper presents an estimation of the behaviour of wealth accumulation, carried out on panel data. One of the aims of the study is to test some of the predictions resulting from the buffer-stock model of saving, especially the unit permanent income elasticity of wealth accumulation and the shape...

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Bibliographic Details
Published in:Economica (London) 2004-11, Vol.71 (284), p.589-618
Main Author: Lollivier, Stéfan
Format: Article
Language:English
Subjects:
Age
Bequests
Consumer behaviour
Consumer economics
Economic models
Economic theory
Estimation methods
Households
Income
Income distribution
Income estimates
Life cycles
Microeconomics
Modeling
Savings
Self employment
Studies
Wealth
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Summary:This paper presents an estimation of the behaviour of wealth accumulation, carried out on panel data. One of the aims of the study is to test some of the predictions resulting from the buffer-stock model of saving, especially the unit permanent income elasticity of wealth accumulation and the shape of the age profile. However, in the data available the wealth variable is not continuous. It is known only through a system of eleven intervals. Therefore, methods based on the use of the simulator by Geweke, Hajivassiliou and Keane have been implemented to obtain consistent estimators.
ISSN:0013-0427
1468-0335
DOI:10.1111/j.0013-0427.2004.00390.x