Abstract
In this paper, we consider Brazil, Colombia, Peru, and Venezuela for a study on aggregate consumption behavior, in which we test the life cycle-permanent income hypothesis prediction that consumption growth depends only on the interest rate. Nevertheless, our results suggest that in general predicted income is a relevant covariate. We checked for some possible reasons behind this result, namely liquidity constraints, myopia and perverse asymmetry. We found support for liquidity constrained consumers in Brazil and Colombia, and perverse asymmetry for Peru. Finally, the results were uninformative about consumption in Venezuela.
Original language | English (US) |
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Pages (from-to) | 129-145 |
Number of pages | 17 |
Journal | Economia Aplicada |
Volume | 14 |
Issue number | 2 |
DOIs | |
State | Published - Apr 2010 |
Keywords
- Consumption
- Liquidity constraints
- Myopia
- Permanent income
- South America
ASJC Scopus subject areas
- General Economics, Econometrics and Finance