Consumption Volatility, Liquidity Constraints and Household Welfare

Keshav Dogra and Olga Gorbachev

No 15-05, Working Papers from University of Delaware, Department of Economics

Abstract: We evaluate the impact of increased income uncertainty and financial liberalisation in the US on consumption volatility and household welfare. We estimate Euler equations and measure the volatility of unpredictable changes in consumption as the squared residuals. We directly control for liquidity constraints using SCF data on access to credit, and document that despite the increase in household debt between 1983 and 2007, there was no decline in the proportion of liquidity constrained households. Consumption volatil-ity increased significantly over this period, especially for liquidity constrained households, indicating substantial welfare losses.

Keywords: liquidity constraints; consumption; income; volatility; welfare (search for similar items in EconPapers)
JEL-codes: D12 D91 E21 J15 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2015
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Forthcoming in Economic Journal

Downloads: (external link)
http://www.lerner.udel.edu/sites/default/files/ECO ... 2015/UDWP2015-05.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2015/UDWP2015-05.pdf [301 Moved Permanently]--> https://lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2015/UDWP2015-05.pdf)

Related works:
Journal Article: Consumption Volatility, Liquidity Constraints and Household Welfare (2016)
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: https://EconPapers.repec.org/RePEc:dlw:wpaper:15-05

Access Statistics for this paper

More papers in Working Papers from University of Delaware, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Saul Hoffman ().