¹⁶A large empirical literature has found that variants of this specification capture well the key features of actual household-level income processes; see Topel (1991), Carroll (1992), Moffitt and Gottschalk (2011), Storesletten, Telmer, and Yaron (2004), ?, DeBacker, Heim, Panousi, Ramnath, and Vidangos (2013), and many others (see Table 1 in Carroll, Slacalek, and Tokuoka (2015) for a summary).