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Contracts, constraints, and consumption Author info | Abstract | Publisher info | Download info | Related research | Statistics Edward J. Green
Soo-Nam Oh
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The paper compares implications of three kinds of models of households’ consumption behavior: the basic permanent-income model, several models of liquidity-constrained households, and a model of an informationally-constrained efficient contract. These models are distinguished in terms of implications regarding the present discounted values of net trades to households at various levels of temporary income, and the households’ marginal rates of substitution. Martingale consumption is studied as an approximation to the predicted consumption process of the efficient-contract model.
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Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number
143.
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Date of creation: 1991Date of revision:
Handle: RePEc:fip:fedmsr:143Contact details of provider: Postal: 90 Hennepin Avenue, P.O. Box 291, Minneapolis, MN 55480-0291 Phone: (612) 204-5000 Web page: http://minneapolisfed.org/ More information through EDIRC
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Keywords: Consumption (Economics) ; Other versions of this item:
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