TY  - JOUR
AU  - Hayashi,Fumio
TI  - The Effect of Liquidity Constraints on Consumption: A Cross-Sectional Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 882
PY  - 1982
Y2  - April 1982
UR  - http://www.nber.org/papers/w0882
L1  - http://www.nber.org/papers/w0882.pdf
N1  - Author contact info:
Fumio Hayashi
Hitotsubashi University
Grad. School of International Corporate Strategy
2-1-2 Hitotsubashi, Chiyoda-ku
Tokyo 101-8439
JAPAN
Tel: 81-3-5841-5652
Fax: 1-801-469-0086
E-Mail: fumio.hayashi@gmail.com
AB  - This paper examines the effect of liquidity constraints on consumption expenditures using a single-time cross-section data set. A reduced-form equation for consumption is estimated on high-saving households by the Tobit procedure to account for the selectivity bias. Since high-saving households are not likely to be liquidity constrained, the estimated equation is an appropriate description of how desired consumption dictated by the life cycle-permanent income hypothesis is related to the variables available in the cross-section data. When the reduced-form equation is used to predict desired consumption, the gap between desired consumption and measured consumption is most evident for young households.
ER  -