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Financial Deregulation and Consumer Behavior: the Norwegian Experience

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Abstract

The present paper uses the model by Campbell and Mankiw (1991) to examine the Norwegian consumer behavior and the role of the financial deregulation during the 1980s. For quarterly data on non-durables and services, we estimate the fraction of current income consumers to be in the range of 37% and 75% before the financial deregulation. This evidence indicates a substantial departure from the rational, forward-looking behavior, and there is thus reason to believe that liquidity constraints did bind the Norwegian consumer behavior until the mid 1980s. Our results further suggest that this evidence has disappeared after the financial deregulation in that the estimated fraction of current income consumers is essentially zero after 1985. This finding is so much more remarkable in that hardly any other aggregate time-series data set, from any country, conforms this closely with the forward-looking hypothesis.

Suggested Citation

  • Pål Boug & Knut Anton Mork & Trond Tjemsland, 1995. "Financial Deregulation and Consumer Behavior: the Norwegian Experience," Discussion Papers 156, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:156
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp_156.pdf
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    Cited by:

    1. Elin Halvorsen, 2003. "Financial Deregulation and Household Saving. The Norwegian Experience Revisited," Discussion Papers 361, Statistics Norway, Research Department.
    2. Lindberg, Sara, 1999. "Consumption and Capital Mobility in the Nordic Countries," Working Paper Series 1999:6, Uppsala University, Department of Economics.
    3. Sverre Grepperud, 1997. "Soil Depletion Choices under Production and Price Uncertainty," Discussion Papers 186, Statistics Norway, Research Department.
    4. Einar Bowitz & Ådne Cappelen, 1997. "Incomes Policies and the Norwegian Economy 1973-93," Discussion Papers 192, Statistics Norway, Research Department.

    More about this item

    Keywords

    Consumer behavior; financial deregulation; econometrics.;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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