% Use the following documentclass line if compiling using the LaTeX->DVI->DVIPS->PS->PDF method
\documentclass[12pt,reqno,letterpaper]{article}\usepackage[dvips]{hyperref}


\usepackage{amsmath,latexsym,amsfonts,amssymb,graphicx,url,natbib,dcolumn,color,booktabs,verbatim,ifthen}
\usepackage[twoside,marginparwidth=0in,left=1.0in,right=1.0in,top=1.0in,bottom=1.0in]{geometry}
\usepackage{layouts}
\usepackage{rotating}

\definecolor{darkblue}{rgb}{0.055,0.094,0.588}
\definecolor{darkred}{rgb}{0.69,0,0.0157}
\hypersetup{colorlinks=true, %false,
            urlcolor=darkred,
            citecolor=darkblue,
            linkcolor=red, %Magenta,
            baseurl={http://econ.jhu.edu/people/ccarroll},
            pdfpagemode=none,
            pdfstartview=FitH,
            pdfauthor={Christopher Carroll <ccarroll@jhu.edu>, Jirka Slacalek <jiri.slacalek@ecb.int>, Martin Sommer <msommer@imf.org>},
            pdftitle={International Evidence on Sticky Consumption Growth},
            pdfsubject={International Evidence on Sticky Consumption Growth},
            pdfkeywords={Sticky Expectations, Consumption Dynamics, Habit Formation; JEL: C6, D9, E2
            },
            pdfproducer = {LaTeX with hyperref and thumbpdf},
            pdfcreator = {ps2pdf, pdfwrite}
            }

\newcolumntype{d}[1]{D{.}{.}{#1}}

\newcommand{\bi}{\begin{itemize}}
\newcommand{\ei}{\end{itemize}}
\newcommand{\be}{\begin{equation}}
\newcommand{\ee}{\end{equation}}

\DeclareMathOperator{\var}{var}
\DeclareMathOperator{\Exp}{\mathbf{E}}
\newcommand{\showEstTime}[1]{} % \newcommand{\showEstTime}[1]{#1}

\hyphenation{non-du-ra-bles}
\defcitealias{som02}{Sommer's (2002)}
\defcitealias{som07}{Sommer's (2007)}
\defcitealias{hal78}{Hall's (1978)}

% Fuzz -------------------------------------------------------------------
\hfuzz2pt % Don't bother to report over-full boxes if over-edge is < 2pt
% Line spacing -----------------------------------------------------------
\newlength{\defbaselineskip}
\setlength{\defbaselineskip}{\baselineskip}
\newcommand{\setlinespacing}[1]%
           {\setlength{\baselineskip}{#1 \defbaselineskip}}
\newcommand{\doublespacing}{\setlength{\baselineskip}%
                           {2.0 \defbaselineskip}}
\newcommand{\singlespacing}{\setlength{\baselineskip}{\defbaselineskip}}
\newcommand{\lllskip}{1}

%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

\begin{document}



\thispagestyle{empty} \setlinespacing{\lllskip}
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

\title{\LARGE International Evidence on \\ Sticky Consumption Growth%
\footnote{Carroll: Department of Economics, Johns Hopkins
University, Baltimore, MD,
\url{http://econ.jhu.edu/people/ccarroll}; Slacalek: European
Central Bank, Frankfurt am Main, Germany,
\url{http://www.slacalek.com/}; Sommer: International Monetary Fund,
Washington, DC, \url{http://martinsommeronline.googlepages.com/}. We
thank Angela Espiritu and Stephanie Denis for excellent research
assistance and the participants at the NBER Summer Institute for
insightful comments. We are grateful to Ray Barrell, Carol Bertaut,
Amanda Choy, Nathalie Girouard, Roberto Golinelli and Robert Metz
for help in constructing the dataset. Data and econometric programs
that generated all of the results in the paper are available from
the first author's web page,
\url{http://econ.jhu.edu/people/ccarroll}.
The views presented in this paper are those of the authors, and should not be attributed to the International Monetary Fund, its Executive Board, or management, or to the European Central Bank.%
}}

\author{Christopher D. Carroll\\ \small\href{mailto:ccarroll@jhu.edu}{\texttt{ccarroll@jhu.edu}}\\ JHU
\and Jirka Slacalek\\
\small\href{mailto:jiri.slacalek@ecb.int}{\texttt{jiri.slacalek@ecb.int}}
\\  ECB \and Martin Sommer\\
\small\href{mailto:msommer@imf.org}{\texttt{msommer@imf.org}} \\ IMF
}

\date{\today}

\maketitle

\begin{abstract}

The debate over the degree of `stickiness' in aggregate consumption
growth (usually interpreted as reflecting consumption habits) has
focused principally on the United States.  This paper examines the
evidence for
 all 13 advanced economies for which we could find the necessary data.  Using two different econometric techniques that
correct for the presence of measurement error, we find that the
autocorrelation coefficient for consumption growth is above 0.5
almost everywhere, averaging about 0.7 across countries. In all
economies, the sticky-consumption-growth model outperforms the
random walk model of Hall (1978), and typically fits the aggregate
consumption data better than the Campbell and Mankiw (1989) model
with rule-of-thumb consumers. In a few cases, the
sticky-consumption-growth and Campbell--Mankiw models work about
equally well and cannot be statistically distinguished from each
other.

\end{abstract}

\noindent\textbf{Keywords}: Sticky Expectations, Consumption
Dynamics, Habit Formation
\\[1mm]
\textbf{JEL classification}: C6, D9, E2

\medskip\medskip

\begin{tabular}{rc}
   Paper:   & \url{http://econ.jhu.edu/people/ccarroll/papers/cssIntlStickyC.pdf}
\\ Archive: & \url{http://econ.jhu.edu/people/ccarroll/papers/cssIntlStickyC.zip}
\end{tabular}
\thispagestyle{empty}
\newpage
\setcounter{page}{1}

\input./tables/tAllCountriesFin.tex
\input./tables/tAllCgroups.tex

\input../matlab/dataNoutput/t1stStage.tex
\clearpage

\begin{figure}
\caption{Measured and ``True'' Consumption Growth---G7 Countries}
\label{fG7}
\begin{center}
\includegraphics[height=5in,width=\textwidth]{../matlab/dataNoutput/fG7.eps}
\end{center}
\end{figure}


\begin{figure}
\caption{Measured and ``True'' Consumption Growth---Other Countries}
\label{fOther}
\begin{center}
\includegraphics[height=6.7in,width=\textwidth]{../matlab/dataNoutput/fOther.eps}
\end{center}
\end{figure}




\end{document}
