E0042000

open access

Version of Record

The Cross-Euler Equation Approach to Testing for the Liquidity Constraint : Evidence from Consumer Expenditure Survey

English (英語)

國民經濟雜誌

221(3)

43-70

神戸大学経済経営学会

2020-03-10

2021-04-01

In this paper, we utilize Cross-Euler method in testing for the existence of liquidity constraint. We adopt standard two goods version of Life-Cycle model to study the consumption behavior of necessity goods and luxury goods. Then we construct synthetic panel data from the Consumer Expenditure Survey where households have been classified to cohorts by their ages and educational attainments. Taking the Cross-Euler equation approach in testing for the liquidity constraints, the test rejected the null of no liquidity constraint for low-education cohorts, while accepting the null for high-education cohorts. Taking an education level as a proxy for permanent income, the test results were consistent with the view that poorer agents are more likely to be liquidity constrained.

Necessity Goods

紀要論文