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Financial Liberalisation and Consumption Behaviour

Author

Listed:
  • Adrian Blundell-Wignall

    (Reserve Bank of Australia)

  • Frank Browne

    (Organisation for Economic Co-operation and Development)

  • Stefano Cavaglia

    (Organisation for Economic Co-operation and Development)

  • Alison Tarditi

    (Reserve Bank of Australia)

Abstract

The paper addresses the question of whether financial liberalisation and innovation have significantly altered consumption behaviour by reducing liquidity constraints as capital markets have become more flexible. A consumption model in which the permanent income hypothesis and extreme Keynesian consumption functions are nested as special cases is the starting point for this analysis. Estimated values for the sensitivity of consumption to current income for different time periods and for several OECD countries are assessed and compared in the light of various econometric properties, country-specific liberalisation measures and a variety of proxies reflecting changing liquidity constraints.

Suggested Citation

  • Adrian Blundell-Wignall & Frank Browne & Stefano Cavaglia & Alison Tarditi, 1992. "Financial Liberalisation and Consumption Behaviour," RBA Research Discussion Papers rdp9209, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp9209
    as

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    File URL: https://www.rba.gov.au/publications/rdp/1992/pdf/rdp9209.pdf
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    References listed on IDEAS

    as
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    9. Adrian Blundell-Wignall & Frank Browne & Stefano Cavaglia, 1991. "Financial Liberalisation and Consumption Behaviour," OECD Economics Department Working Papers 81, OECD Publishing.
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    Cited by:

    1. Miguel Ángel Mendoza González, 2020. "Sensibilidad y asimetrías ante choques de ingreso en el consumo privado de México, 1995-2017. (Sensitivity and asymmetries of income shocks in Mexico's private consumption, 1995-2017)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 21-58, May.
    2. David M. Williams, 2010. "Consumption, wealth and credit liberalisation in Australia," Economics Series Working Papers 492, University of Oxford, Department of Economics.
    3. Ross Guest & Ian McDonald, 1998. "The Socially Optimal Level of Saving in Australia, 1960‐61 to 1994‐95," Australian Economic Papers, Wiley Blackwell, vol. 37(3), pages 213-235, September.

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