Consumption in South America: myopia or liquidity constraints?
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.
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| Main Authors: | , |
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| Format: | Digital revista |
| Language: | English |
| Published: |
Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto da Universidade de São Paulo
2010
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| Online Access: | http://old.scielo.br/scielo.php?script=sci_arttext&pid=S1413-80502010000200001 |
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