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Excess Sensitivity and Asymmetries in Consumption: An Empirical Investigation Author info | Abstract | Publisher info | Download info | Related research | Statistics Garcia, Rene
Lusardi, Annamaria
Ng, Serena
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Most empirical studies on liquidity constraints classify a consumer as being constrained on the basis of a single indicator such as the asset to income ratio. In this analysis, the authors model the probability that a consumer faces liquidity constraints as a function of multiple social and economic factors. This probability function is estimated simultaneously with the degree of excess sensitivity of consumption to income in a switching regressions framework. The switching regressions apply optimal weights to the densities for the Euler equations in the two states and are less susceptible to sample misclassification. Our results based on data from the CEX confirm that liquidity constrained consumers are excessively sensitive to variables already known to economic agents. However, there is also evidence that the unconstrained consumers exhibit behavior that is inconsistent with the theoretical predictions. Further analysis suggests that such behavior could be explained by time non-separable preferences. Copyright 1997 by Ohio State University Press.
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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking .
Volume (Year): 29 (1997)
Issue (Month): 2 (May)
Pages: 154-76
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Handle: RePEc:mcb:jmoncb:v:29:y:1997:i:2:p:154-76Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
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Paper René Garcia & Annamaria Lusardi & Serena Ng, 1995.
"Excess Sensitivity and Asymmetries in Consumption: An Empirical Investigation ,"
CIRANO Working Papers
95s-09, CIRANO.
[Downloadable!] Garcia, R. & Lusardi, A. & Ng, S., 1995.
"Excess Sensitivity and Asymmetries in Consumption: an Empirical Investigation ,"
Cahiers de recherche
9511, Universite de Montreal, Departement de sciences economiques.
[Downloadable!] Garcia, R. & Lusardi, A. & Ng, S., 1995.
"Excess Sensitivity and Asymmetries in Consumption: An Empirical Investigation ,"
Cahiers de recherche
9511, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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