Credit rationing and the permanent income hypothesis

• Vicente Madrigal ^[1] ; Tommy Tan ^[4] ; Daniel Vicent ^[2] ; Sergio Ribeiro da Costa Werlang ^[3]
  1. [1] New York University

     New York University

     Estados Unidos

     
  2. [2] Northwestern University

     Northwestern University

     Township of Evanston, Estados Unidos

     
  3. [3] Fundação Getulio Vargas

     Fundação Getulio Vargas

     Brasil

     
  4. [4] Morgan Stanley Singapur.

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• Localización: Revista de análisis económico, ISSN-e 0718-8870, ISSN 0716-5927, Vol. 8, Nº 2, 1993, págs. 19-29
• Idioma: inglés
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• Resumen

  • We model endogenous credit rationing and its effects on aggregate consumption behavior. We explain two important empirical paradoxes of the consumption literature. First, it is possible that some configurations of income/consumption streams be such that an outside observer could estimate a marginal propensity to consume greater than one. Second, if one tried to estimate an intertemporal substitution model disregarding credit constraints, it might result in a nonconcave utility function, even when consumers utility functions are concave.