AN ALL-ENCOMPASSING CONSUMPTION FUNCTION - THE AUSTRALIAN CASE

The paper reports some empirical findings of the Davidson, Hendry, Srba and Yeo (1978) consumption function fitted to Australian quarterly data for the period 1969.3 to 1982.2. The evidence rejects, in terms of the maximum likelihood ratio test, the unitary differencing and price homogeneity restrictions and supports a simple dynamic forecasting model with unconstrained parameters.