⁴¹Szeidl (2013)’s equation (9), in our notation, is:

and under our assumption that $logψ ∼ 𝒩 (− σ2 ∕2,σ2 ) ψ ψ$ we can exponentiate both sides to obtain the GIC, $ÞÞÞ < 1 Γ$ . If the permanent income shocks are not lognormally distributed the expression must be tested in Szeidl’s original form.