This paper estimates and tests several versions of the consumption-based asset pricing model extended to allow for time-nonseparable preferences and/or liquidity constraint proxies, using Canadian aggregate data. It is found that a habit-persistence effect uncovered in the time-nonseparable...

In this paper, we estimate the behavior of private consumption in Cote d’Ivoire under the permanent income hypothesis using annual data for the period 1970–2016. The first objective is to test the validity of the permanent income hypothesis in Cote d’Ivoire. Our second concern is to...

In this paper I use national accounts data from nineteen OECD countries to test the existence and measure the importance of liquidity constraints. This is accomplished by nesting a fraction of current income consumers in the permanent income model. The generalized method of moments (GMM) used in...

We study whether the level of household indebtedness is related to the interest rate elasticity of private consumption. Looking at Finnish aggregate data, we find no robust evidence of increased interest rate elasticity of private consumption even as the household sector's debt-to-income ratio...

Was the increase in income inequality in the US due to permanent shocks or merely to an increase in the variance of transitory shocks? The implications for consumption and welfare depend crucially on the answer to this question. We use CEX repeated cross-section data on consumption and income to...

Overconfidence is a widely documented phenomenon. Empirical evidence reveal two types of overconfidence in financial markets: investors both overestimate the average rate of return to their assets and underestimate uncertainty associated with the return. This paper explores implications of...

This paper uses a dataset from one of the largest credit card issuers in Brazil to investigate the extent of credit constraints for one of the world's largest emerging market economies. In order to deal with the endogeneity problem from an observational dataset, an identification strategy based...

The revolving credit available to consumers changes substantially over the business cycle, life cycle, and for individuals. We show that debt changes at the same time as credit, so credit utilization is remarkably stable. From ages 20–40, for example, credit card limits grow by more than 700...

In the light of new theoretical and empirical work on the Permanent Income Hypothesis we tackle earlier findings for German data, which reject its validity given a large fraction of liquidity constrained consumers. Starting from a standard short run approach we do not find evidence for excess...