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Working Paper

Stochastic Interest Rates in the Aggregate Life Cycle/Permanent Income Cum Rational Expectations Model

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An estimation of the life cycle/permanent income model with rational expectations that allows for uncertain future interest rates. Results provide ample evidence to reject this form of model during the postwar period.
10.01.1985ISSN 2573-7953 WP 85-06

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Kowalewski, Kim J. 1985. “Stochastic Interest Rates in the Aggregate Life Cycle/Permanent Income Cum Rational Expectations Model.” Federal Reserve Bank of Cleveland, Working Paper No. 85-06.