Consumption Smoothing and Liquidity Income Redistribution

Giuseppe Bertola and Winfried Koeniger ()

No 2006/34, CFS Working Paper Series from Center for Financial Studies

Abstract: We show theoretically that income redistribution benefits borrowingconstrained individuals more than is implied by standard relative-income and uninsurable-risk considerations. Empirically, we find in international opinion-survey data that younger and lower-income individuals express stronger support for government redistribution in countries where consumer credit is less easily available. This evidence supports our theoretical perspective if such individuals are more strongly affected by tighter credit supply, in that expectations of higher incomes in the future increase their propensity to borrow.

Keywords: Consumption; Smoothing (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2007-01-02
View list of references

Downloads: (external link)
http://www.ifk-cfs.de/fileadmin/downloads/publications/wp/06_34.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cfs:cfswop:wp200634

Access Statistics for this paper

More papers in CFS Working Paper Series from Center for Financial Studies
Contact information at EDIRC.
Series data maintained by Birgit Pässler ().