Skip to main content

Stationary properties of the real interest rate and the per-capita consumption growth rate: empirical evidence for theoretical arguments

Buy Article:

$51.63 plus tax (Refund Policy)


Many economic theories connecting the real interest rate and the per-capita consumption growth rate require that both rates evolve together over time. This article investigates whether these rates present similar stationary behaviour for the seven most industrialized countries over the 1957-2005 period. The analysis relies on the unit root tests developed by Elliott et al. (1996) and Lopez (2006) to look for stationary or regime-wise stationary behaviour, respectively. Furthermore, the final break selection uses Bai and Perron's (2003) method. The results show, for all the countries considered, that both rates are either stationary or regime-wise stationary with the same number of breaks and, mostly, with corresponding dates. The results hold whether the rates are calculated annually or quarterly.

Document Type: Research Article


Affiliations: 1: Department of Economics, University of Cincinnati, Cincinnati, OH, USA 2: Department of Economics, University of Arkansas, Sam M. Walton College of Business, USA

Publication date: May 1, 2009

More about this publication?

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more
Real Time Web Analytics