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

Author

Listed:
  • 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.

Suggested Citation

  • Eric Girardin & Lucio Sarno & Mark P. Taylor, 2000. "Private consumption behaviour, liquidity constraints and financial deregulation in France: a nonlinear analysis," Empirical Economics, Springer, vol. 25(2), pages 351-368.
    • 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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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Tomas Havranek & Anna Sokolova, 2016. "Do Consumers Really Follow a Rule of Thumb? Three Thousand Estimates from 130 Studies Say "Probably Not"," Working Papers 2016/08, Czech National Bank.
    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. Manoel Bittencourt & Chance Mwabutwa & Nicola Viegi, 2012. "Financial Reforms and Consumption Behaviour in Malawi," Working Papers 201210, University of Pretoria, Department of Economics.
    6. Luciano Fanti & Luca Gori, 2013. "Fertility-related pensions and cyclical instability," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1209-1232, July.
    7. Gerdie Everaert & Lorenzo Pozzi & Ruben Schoonackers, 2017. "On the Stability of the Excess Sensitivity of Aggregate Consumption Growth in the USA," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(4), pages 819-840, June.
    8. International Monetary Fund, 2006. "Union of the Comoros: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2006/385, International Monetary Fund.
    9. Julian Thimme, 2017. "Intertemporal Substitution In Consumption: A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 31(1), pages 226-257, February.

    More about this item

    Keywords

    consumption; credit; liquidity constraints; Euler equation; financial liberalization; nonlinearity;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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