The Norwegian consumption function: a comment

The article discusses some aspects of the error correction model for the Norwegian consumption function proposed in Brodin and Nymoen (1991). The main focus is on the pursued simplification process since the simplified model contains an error correcting variable that includes a contemporaneous variable, and it further includes combinations of variables which may be hard to interpret. The economic implications of the alternative model for the Norwegian consumption, are that, apart from deterministics, consumption is effected by current income and wealth, and that the dynamics are established by an average of past changes in consumption/income ratios.