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Under common ARIMA representations of income, the permanent-income hypothesis predicts that the volatility of consumption should be larger than the volatility of unanticipated shocks to income; 'this prediction is not supported by the data. We examine whether this apparent excess smoothness of consumption is the result of the ARIMA representation's implicit restrictions on low-frequency dynamics. By using a generalized long-memory stochastic representation, we construct confidence intervals fordoi:10.2307/2109680 fatcat:jsirbjaadzab5i2vqzfnoznm2y