²⁷The interest rate spread is a variable that has long been used in the consumption growth literature, having first been shown to have robust explanatory power for consumption growth in the literature testing Hall’s random walk theory in the 1980s. Interest rates are measured essentially without error, and we can think of no reason the spread would be correlated with measurement error or transitory disturbances to consumption growth. Income growth has been perhaps the most intensively studied variable in this literature, dating back to the original work of Hall (1978) and Flavin (1981).