Smoothing consumption under income seasonality: Buffer stocks vs. credit markets
AbstractRural households in many developing economies have incomes that vary seasonally. We explore the implications of this income seasonality for household consumption. We use household-level data from three Indian villages to document seasonal patterns in income and consumption, and to test whether income seasonality produces seasonal consumption variation. Our basic finding is that while there does appear to be some seasonality in consumption patterns, it is much less pronounced than in the case of income, and more surprisingly, that the patterns are quite similar for households with very different seasonal income patterns. While this finding is consistent with wellfunctioning credit markets, we show, through simulations, that it is also consistent with a simple buffering model of consumption in which cautious households cannot borrow, but can save via the accumulation of assets. We provide evidence that suggests that households rely more on buffering behavior than on credit markets to smooth consumption under income seasonality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0102-54.
Length: 29 pages
Date of creation: 2002
Date of revision:
Contact details of provider:
Postal: 1022 International Affairs Building, 420 West 118th Street, New York, NY 10027
Phone: (212) 854-3680
Fax: (212) 854-8059
Web page: http://www.econ.columbia.edu/
More information through EDIRC
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Discussion Paper Coordinator).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.