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Private consumption behaviour, liquidity constraints and financial deregulation in France: a nonlinear analysis

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Author Info

  • Eric Girardin

    (Université de la Mediterranée Aix-Marseille II Ceders, Faculté des Sciences Economiques et de Gestion 14, Avenue Jules Ferry, F-13621 Aix-en-Provence Cedex, FRANCE)

  • Lucio Sarno

    ()
    (University College, University of Oxford, Oxford OX1 4BH, United Kingdom)

  • Mark P. Taylor

    ()
    (Warwick Business School, University of Warwick, Coventry CV4 7AL, UK)

Abstract

This paper examines the effect of financial deregulation on consumption expenditure in France during the period 1970-1993. A nonlinear model for consumption which allows for liquidity constraints through a time-varying parameter dependent on a proxy for financial deregulation is estimated using nonlinear instrumental variables. It is concluded that in France financial deregulation has significantly reduced liquidity constraints faced by consumers, allowing a higher percentage of the population to smooth consumption over time. Evidence is also provided that the intertemporal elasticity of substitution is not significantly different from zero at conventional nominal levels of significance.

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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 25 (2000)
Issue (Month): 2 ()
Pages: 351-368

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Handle: RePEc:spr:empeco:v:25:y:2000:i:2:p:351-368

Note: received: January 1997/final version received: May 1999
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Related research

Keywords: consumption; credit; liquidity constraints; Euler equation; financial liberalization; nonlinearity;

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Cited by:
  1. Luciano Fanti & Luca Gori, 2013. "Fertility-related pensions and cyclical instability," Journal of Population Economics, Springer, vol. 26(3), pages 1209-1232, July.
  2. Manoel Bittencourt & Chance Mwabutwa & Nicola Viegi, 2012. "Financial Reforms and Consumption Behaviour in Malawi," Working Papers 201210, University of Pretoria, Department of Economics.
  3. Magda Kandil & Ida Mirzaie, 2006. "Consumption and macroeconomic policies: Theory and evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(4), pages 469-491.
  4. Elena Marquez de la Cruz & Ana Martinez-Canete & Ines Perez-Soba Aguilar, 2007. "Intertemporal preference parameters for some European monetary union countries," Applied Economics, Taylor & Francis Journals, vol. 39(8), pages 997-1011.
  5. L. Pozzi & F. Heylen & M. Dossche, 2002. "Government debt and the excess sensitivity of private consumption to current income: an empirical analysis for OECD countries," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/155, Ghent University, Faculty of Economics and Business Administration.

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