Interest Rates and Intertemporal Substitution for Indian Farm Households

1998 ◽  
Author(s):  
James J. Fetzer
Keyword(s):  
Interest Rates ◽  
Farm Households ◽  
Intertemporal Substitution

scholarly journals A Tax-Based Estimate of the Elasticity of Intertemporal Substitution

2013 ◽  
Vol 03 (01) ◽  
pp. 1350001 ◽  
Author(s):  
Jonathan Gruber
Keyword(s):  
Time Series ◽  
Interest Rate ◽  
Interest Rates ◽  
Consumer Expenditure ◽  
Intertemporal Substitution ◽  
Tax Rate ◽  
Elasticity Of Intertemporal Substitution ◽  
Using Data ◽  
The Interest Rate ◽  
The Impact

One of the most important behavioral parameters in macroeconomics is the elasticity of intertemporal substitution (EIS). Starting with the seminal work of Hall (Hall, R., 1978, Stochastic Implications of the Life Cycle — Permanent Income Hypothesis: Theory and Evidence, Journal of Political Economy 86, 971–987), researchers have used an Euler equation framework to estimate the EIS, relating the growth rate of consumption to the after-tax interest rate facing consumers. This large literature has, however, produced very mixed results, perhaps due to an important limitation: The impact of the interest rate on consumption or savings is identified by time-series movements in interest rates. Yet the factors that cause time-series movements in interest rates may themselves be correlated with consumption or savings decisions. I address this problem by using variation across individuals in the capital income tax rate. Conditional on observable characteristics of individuals, tax rate movements cause exogenous shifts in the after-tax interest rate. Using data on total non-durable consumption from the Consumer Expenditure Survey over two decades, I estimate a surprisingly high EIS of two. This finding is robust to a variety of specification checks.

Risk Premiums versus Waiting-Options Premiums: A Simple Numerical Example

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Kenji Miyazaki ◽  
Makoto Saito
Keyword(s):  
Risk Aversion ◽  
Interest Rates ◽  
Excess Returns ◽  
Intertemporal Substitution ◽  
Informative Signal ◽  
Risky Assets ◽  
Risk Premiums ◽  
Numerical Examples ◽  
Numerical Example ◽  
New Information

This paper investigates how interest rates on liquid assets and excess returns on risky assets are determined when only safe assets can be used as liquid assets when waiting for an informative signal of future payoffs. In particular, we carefully differentiate between a demand for liquid assets while waiting for new information and a demand for safe assets for precautionary reasons. Employing Kreps--Porteus preferences, numerical examples demonstrate that larger waiting-options premiums (lower interest rates) emerge with higher risk aversion in combination with more elastic intertemporal substitution.

scholarly journals Analysis of Rural Farm Households’ Access to Formal Agricultural Credit in Yola South Local Government Area, Adamawa State, Nigeria

2018 ◽  
Vol 66 (4) ◽  
pp. 947-954 ◽  
Author(s):  
Amurtiya Michael ◽  
Yuniyus Dengle Giroh ◽  
Mark Polycarp ◽  
Zubairu Emmanuel Ashindo
Keyword(s):  
Local Government ◽  
Interest Rates ◽  
Financial Literacy ◽  
Local Government Area ◽  
Farm Households ◽  
Farm Size ◽  
Primary Data ◽  
Agricultural Credit ◽  
Access To Credit ◽  
Awareness Campaigns

The purpose of this study was to analyse rural farm households’ access to formal agricultural credit in Yola South Local Government Area of Adamawa state, Nigeria. Descriptive and inferential statistics were used to analyse the primary data collected using structured questionnaire (from 140 rural farming households). Findings from the study have shown that, 90 % of the respondents were male, mostly educated (70 %) and married (89 %) engaging in farming as their primary livelihood activity (about 81 %) with an average farm size of 2.47 hectares. The result of the binary logit regression has shown that level of education and income do influence access to credit positively, while age and distance to access point negatively influence respondents’ access to formal credit. The study further revealed that, lack of acceptable collateral / security, high interest rates, low financial literacy, and complex banking procedures were the main factors that limits the respondents’ access to credit facility from formal sources. In order for farmers to have an improved access to formal credits, the formation of strong groups that are viable to provide the needed capital is encouraged, banking operations should be simplified to suite farmers’ needs / convenience and financial literacy among farmers should be improved through awareness campaigns (in agricultural extension packages).

scholarly journals Frisch Demand Functions and Intertemporal Behaviour in Consumption: The Turkish Case

2000 ◽  
Vol 39 (3) ◽  
pp. 235-246
Author(s):  
Erdinc Telatar ◽  
Funda Telatar ◽  
Sadiye Turkmen
Keyword(s):  
Interest Rates ◽  
Durable Goods ◽  
Demand System ◽  
Intertemporal Substitution ◽  
Demand Functions ◽  
Price Elasticities ◽  
Current Period ◽  
Nominal Interest Rates ◽  
Turkish Case ◽  
Substitution Elasticity

This paper examines the intertemporal behaviour in consumption for Turkey which has been experiencing high and chronic inflation since the late 1970s. The Frisch demand system is used to estimate three separate but inextricably intertemporal elasticities: intertemporal price elasticities of demand, commodity-specific intertemporal elasticities, and the intertemporal substitution elasticity of consumption. Our main result is that the Turkish households are reluctant to move their expenditures on non-durable goods from the current period to the next period, regardless of how high nominal interest rates are. This interesting result shows that the consumption behaviour in Turkey has been mainly shaped by uncertainty created by inflationary process and the tendency towards hedging against inflation.

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