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In 1987 the federal government permitted states to raise the speed limit on their rural interstate roads, but not on their urban interstate roads, from 55 mph to 65 mph for the first time in over a decade. Since the…

This paper tests the rational expectations lifecycle model of consumption
against (i) a simple Keynesian model and (ii) the rational expectations
lifecycle model with imperfect capital markets. The tests are based upon the
relative responsiveness of consumption to income changes…