Excess sensitivity and borrowing constraints: Evidence from Iranian households

2019 ◽  
Vol 28 (1) ◽  
pp. 137-160
Author(s):  
Majid Einian ◽  
Masoud Nili
Keyword(s):  
Borrowing Constraints ◽  
Excess Sensitivity

scholarly journals On the welfare cost of consumption fluctuations in the presence of memorable goods

2020 ◽  
Vol 11 (4) ◽  
pp. 1177-1214 ◽  
Author(s):  
Rong Hai ◽  
Dirk Krueger ◽  
Andrew Postlewaite
Keyword(s):  
Borrowing Constraints ◽  
Welfare Cost ◽  
Income Shocks ◽  
Income Risk ◽  
Household Level ◽  
Nondurable Goods ◽  
Empirical Estimates ◽  
Percentage Points ◽  
Consumption Fluctuations ◽  
Excess Sensitivity

We propose a new category of consumption goods, memorable goods, that generate a utility flow even after physical consumption. Empirically, memorable goods expenditures exhibit frequent zero monthly purchases and lumpy expenditure spikes. Memorable goods expenditures are 20% the size of nondurable expenditures, but three times as volatile. We then develop a consumption‐savings model with borrowing constraints and income risk that formalizes the notion of memorable goods and distinguishes them from other nondurable goods. We show that consumers optimally choose lumpy consumption of memorable goods. We then measure the welfare cost of consumption fluctuations using our calibrated model and empirically evaluate our calibrated model's predictions for the consumption response to predictable income changes. We find that the welfare cost of household‐level consumption fluctuations induced by income shocks fall from 20.4 to 12.3 percentage points if memorable goods are accounted for, and that empirical estimates of excess sensitivity of consumption may significantly be driven by memorable goods expenditures.

SHOULD THE PRIVATE SECTOR PROVIDE PUBLIC CAPITAL?

2007 ◽  
Vol 11 (3) ◽  
pp. 318-346
Author(s):  
SANTANU CHATTERJEE
Keyword(s):  
Open Economy ◽  
Public Capital ◽  
Borrowing Constraints ◽  
International Capital ◽  
Standard Assumption ◽  
Production Externalities ◽  
International Capital Markets ◽  
Private Provision ◽  
Large Production ◽  
Government Provision

The choice between private and government provision of a productive public good like infrastructure (public capital) is examined in the context of an endogenously growing open economy. The accumulation of public capital need not require government provision, in contrast to the standard assumption in the literature. Even with an efficient government, the relative costs and benefits of government and private provision depend crucially on the economy's underlying structural conditions and borrowing constraints in international capital markets. Countries with limited substitution possibilities and large production externalities may benefit from governments encouraging private provision of public capital through targeted investment subsidies. By contrast, countries with flexible substitution possibilities and relatively smaller externalities may benefit either from governments directly providing public capital or from regulation of private providers. The transitional dynamics also are shown to depend on the underlying elasticity of substitution and the size of the production externality.

Borrowing Constraints and Homeownership Over the Recent Cycle

2016 ◽  
Author(s):  
Arthur Acolin ◽  
Jesse Bricker ◽  
Paul S. Calem ◽  
Susan M. Wachter
Keyword(s):  
Borrowing Constraints

Real Estate

2017 ◽  
Author(s):  
Stefan Homburg
Keyword(s):  
Real Estate ◽  
Great Recession ◽  
House Prices ◽  
Borrowing Constraints ◽  
Macroeconomic Models ◽  
Land Prices ◽  
The Great Recession ◽  
Quantitative Importance

Chapter 6 examines real estate as a neglected feature of actual economies. It begins with an empirical overview demonstrating the preeminent role of land as a part of nonfinancial wealth. Whereas many macroeconomic models represent nonfinancial wealth by a symbol K that is interpreted as machines and equipment (if not robots), the text makes clear that such items are of minor quantitative importance. In contemporary economies, nonfinancial wealth consists chiefly of real estate. This is the proper reason so many analysts conjecture a link between house prices and the Great Recession. Changes in house prices (primarily changes in land prices) operate on the economy through their influence on nonfinancial wealth. Nonfinancial wealth affects consumption directly and investment indirectly since it relaxes or tightens borrowing constraints. Building on the results obtained in previous chapters, the text studies housing manias and leverage cycles and relates its main findings to US data.

Introduction

2017 ◽  
Author(s):  
Stefan Homburg
Keyword(s):  
Great Recession ◽  
Rational Expectations ◽  
Borrowing Constraints ◽  
Distinctive Features ◽  
Net Worth ◽  
The Great Recession ◽  
External Finance ◽  
International Audience ◽  
Aims And Scope

Chapter 1 describes the book’s aims and scope. The main objective is to improve understanding of the Great Recession and its aftermath. The book provides a unified theoretical framework that uses dynamic general equilibrium models, or DGE, but dispenses with the rational expectations assumption. Its distinctive features are clean models with a rich institutional structure encompassing credit money, external finance, borrowing constraints, net worth, real estate, and commercial banks. Written for economists in universities, governments, and financial institutions, the book addresses an international audience.

Life insurance demand and borrowing constraints

2021 ◽  
Vol 24 (1) ◽  
pp. 37-69
Author(s):  
Bojan Srbinoski ◽  
Klime Poposki ◽  
Patricia H. Born ◽  
Valter Lazzari
Keyword(s):  
Life Insurance ◽  
Borrowing Constraints ◽  
Insurance Demand ◽  
Life Insurance Demand

scholarly journals The Excess Sensitivity of Layoffs and Quits to Demand

1984 ◽  
Vol 2 (2) ◽  
pp. 233-257 ◽  
Author(s):  
Robert E. Hall ◽  
Edward P. Lazear
Keyword(s):  
Excess Sensitivity
Sign in / Sign up

Export Citation Format

Share Document