Financial Liberalisation, Consumption and Wealth Effects in 7 OECD Countries

Ray Barrell and Professor E. Philip Davis (e_philip_davis@msn.com)

No 247, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: We estimate the impact of financial liberalisation on consumption in 7 major industrial countries, and find a marked shift in behaviour, notably a decline in short run income elasticities and a rise in short run wealth and interest rate elasticities. A corollary is that consumption equations estimated over both pre- and post-liberalisation regimes may be misleading, and either a form of testing as presented here or a shortening of the sample period may be appropriate for accurate forecasting and simulation.

Date: 2004-05
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:247

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