Nonlinear adjustment to the mean reversion of consumption-income ratio

- We investigate the mean reversion behavior of APC in 16 OECD countries.
- We use a flexible Fourier stationary test proposed by Becker et al. (2006).
- The mean reversion hypothesis is not rejected for 12 of the 16 countries.

This study utilizes a flexible Fourier stationary test, proposed by Becker et al. (2006) to investigate the mean reversion of consumption-income ratio in 16 OECD countries from 1960 to 2010. Empirical results from our flexible nonlinear stationary test show that the mean reversion hypothesis is not rejected for 12 of the 16 OECD countries.