Credit Constraints , Productivity Shocks and Consumption Volatility in Emerging Economies

@inproceedings{Bhattacharya2013CreditC,
  title={Credit Constraints , Productivity Shocks and Consumption Volatility in Emerging Economies},
  author={R. Bhattacharya and Ila Patnaiky},
  year={2013}
}
How does access to credit impact consumption volatility? Theory and evidence from advanced economies suggests that greater household access to finance smooths consumption. Evidence from emerging markets, where consumption is usually more volatile than income, indicates that financial reform further increases the volatility of consumption relative to output. We address this puzzle in the framework of an emerging economy model in which households face shocks to trend growth rate, and a fraction… CONTINUE READING