Tests for Liquidity Constraints: A Critical Survey / Fumio Hayashi.

Format:

Book

Author/Creator:

Hayashi, Fumio.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1720.

NBER working paper series no. w1720

Language:

English

Subjects (All):

Credit--Mathematical models.

Credit.

Consumption (Economics)--Mathematical models.

Consumption (Economics).

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Tests for Liquidity Constraints

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1985.

Cambridge, Mass. : National Bureau of Economic Research, 1985.

Summary:

This paper surveys recent empirical work on tests for liquidity constraints.The focus of the survey is on the tests based on the Euler equation. After examining the technical aspects of the recent tests on aggregate time-series data and on micro data, the survey tries to evaluate their economic significance. The paper concludes that for a significant fraction of the population the behavior of consumption over time is affected in away predicted by credit rationing and differential borrowing and lending rates. However, the available evidence is shown to have failed in providing information necessary to calculate the response of consumption to changes in the time profile of income.The paper attributes the failure to the fact that not much attention in the literature has been paid to the cause of liquidity constraints.

Notes:

Print version record

October 1985.