Identifying Preferences when Households are Financially Constrained

Andreas Tryphonides

Review of Economic Dynamics, 2023, vol. 51, 521-546

Abstract: This paper shows that utilizing information on the extensive margin of financially constrained households can narrow down the set of admissible preferences in a large class of macroeconomic models. Estimates based on Spanish aggregate data provide further empirical support for this result and suggest that accounting for this margin can bring estimates closer to microeconometric evidence. Accounting for financial constraints and the extensive margin is shown to matter for empirical asset pricing and quantifying distortions in financial markets. (Copyright: Elsevier)

Keywords: Preferences; Bounds; Financial constraints; Extensive Margin; Asset Prices (search for similar items in EconPapers)
JEL-codes: C51 E1 E2 E44 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.red.2023.06.001

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