EconPapers    
Economics at your fingertips  
 

The Effect of Liquidity Constraints on Consumption: A Cross-Sectional Analysis

Fumio Hayashi

No 882, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the effect of liquidity constraints on consumption expenditures using a single-time cross-section data set. A reduced-form equation for consumption is estimated on high-saving households by the Tobit procedure to account for the selectivity bias. Since high-saving households are not likely to be liquidity constrained, the estimated equation is an appropriate description of how desired consumption dictated by the life cycle-permanent income hypothesis is related to the variables available in the cross-section data. When the reduced-form equation is used to predict desired consumption, the gap between desired consumption and measured consumption is most evident for young households.

Date: 1982-04
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed

Published as Hayashi, Fumio. "The Effect of Liquidity Constraints on Consumption: A Cross-Sectional Analysis." Quarterly Journal of Economics, Vol. 1985, No. 1, Feb. 1985, pp. 183-206.

Downloads: (external link)
http://www.nber.org/papers/w0882.pdf (application/pdf)

Related works:
Working Paper: The Effect of Liquidity Constraints on Consumption: Cross-Sectional Analysis (1982) Downloads
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:nbr:nberwo:0882

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w0882

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Series data maintained by ().

 
Page updated 2017-03-20
Handle: RePEc:nbr:nberwo:0882