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Permanent income hypothesis: Foundations and evaluation at the local level

Abstract:

Consumer behavior has been studied over the years, on which a series of economic theories have been developed to predict the expected behavior of the economic agent. On the other hand, the permanent income hypothesis states that this prediction depends on unexpected news that alter their behavior, so that, it tends to be unpredictable. For the present study the explanatory power of the variables: consumption, income and interest rate where evaluated for the Ecuadorian economy, obtaining as a result the lack of statistical significance of them in the local market.