Consumption in South America: myopia or liquidity constraints?

@inproceedings{Gomes2010ConsumptionIS,
  title={Consumption in South America: myopia or liquidity constraints?},
  author={F{\'a}bio Augusto Reis Gomes and Lourenço Senne Paz},
  year={2010}
}
In this paper, we consider Brazil, Colombia, Peru, and Venezuela for a study on aggregate consumption behavior, in which we test the life cycle-permanent income hypothesis prediction that consumption growth depends only on the interest rate. Nevertheless, our results suggest that in general predicted income is a relevant covariate. We checked for some possible reasons behind this result, namely liquidity constraints, myopia and perverse asymmetry. We found support for liquidity constrained… CONTINUE READING

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