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El Ahorro y el Consumo de Bienes Durables Frente al Ciclo Económico en Chile: ¿Consumismo, Frugalidad, Racionalidad?

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  • Francisco Gallego
  • Felipe Morandé
  • Raimundo Soto

Abstract

This paper studies empirically the relation between household economic saving (including durable good purchases) and the business cycle using Chilean data. The data show that the relation between household saving and the business cycle is given by the durable consumption dynamics.Consequently, a group of econometric regressions are made in order to study the connections between both kinds of goods. This is the first paper that empirically tests the implications of the permanent income hypothesis (PIH) and the liquidity constraint approach. Several interesting results emerge: first, the strong and weak implications of the PIH are rejected; second, liquidity constraints are moderate and affect both durable and non-durable goods; and, third, Chilean consumers do not smooth consumption because liquidity constraints are binding and not because they are non-rational.

Suggested Citation

  • Francisco Gallego & Felipe Morandé & Raimundo Soto, 2001. "El Ahorro y el Consumo de Bienes Durables Frente al Ciclo Económico en Chile: ¿Consumismo, Frugalidad, Racionalidad?," Working Papers Central Bank of Chile 96, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:96
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    References listed on IDEAS

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    1. Herman Bennett & Norman Loayza & Klaus Schmidt-Hebbel, 2001. "Un estudio del ahorro agregado por agentes económicos en Chile," Central Banking, Analysis, and Economic Policies Book Series, in: Felipe Morandé & Rodrigo Vergara & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edit (ed.),Análisis Empírico del Ahorro en Chile, edition 1, volume 1, chapter 3, pages 49-82, Central Bank of Chile.
    2. John Campbell & Angus Deaton, 1989. "Why is Consumption So Smooth?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(3), pages 357-373.
    3. Carroll, Christopher D. & Weil, David N., 1994. "Saving and growth: a reinterpretation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 133-192, June.
    4. Klaus Schmidt-Hebbel, 1998. "Does Pension Reform Really Spur Productivity, Saving, and Growth?," Working Papers Central Bank of Chile 33, Central Bank of Chile.
    5. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    6. Chah, Eun Young & Ramey, Valerie A & Starr, Ross M, 1995. "Liquidity Constraints and Intertemporal Consumer Optimization: Theory and Evidence from Durable Goods," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 272-287, February.
    7. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    8. Morande, Felipe G., 1998. "Savings in Chile. What went right?," Journal of Development Economics, Elsevier, vol. 57(1), pages 201-228, October.
    9. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2001. "Una Revisión del COmportamiento y de los determinantes del ahorro en el mundo," Central Banking, Analysis, and Economic Policies Book Series, in: Felipe Morandé & Rodrigo Vergara & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edit (ed.),Análisis Empírico del Ahorro en Chile, edition 1, volume 1, chapter 2, pages 13-48, Central Bank of Chile.
    10. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, March.
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    Cited by:

    1. Francisco Gallego & Juan-Pablo Montero & Christian Salas, 2011. "The Effect of Transport Policies on Car Use: Theory and Evidence from Latin American Cities," Documentos de Trabajo 407, Instituto de Economia. Pontificia Universidad Católica de Chile..

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