Private saving, interest rates and liquidity constraints in LDCs: recent evidence

Villagómez, F. Alejandro

doi:10.1080/000368497326804

Cited by 14 publications

(4 citation statements)

References 7 publications

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“…Capital market imperfections or liquidity constraints, which prevent consumers from borrowing when income is temporarily low, may explain aspects of the data that are unexplained by the simple RE-PIH. Browning (1987), Campbell and Mankiw (1989, 1990, 1991, Jappelli and Pagano (1989), Wirjanto (1996), Deaton (1987), Hayashi (1982), Altonji and Siow (1987), and Villagomez (1997) all provide support for the use of liquidity constraints.…”

Section: Introductionmentioning

confidence: 92%

A Joint Test of the Rational Expectations‐Permanent Income Hypothesis under Seasonal Cointegration

Huang

2002

Australian Economic Papers

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This study re-evaluates the validity of the joint rational expectations-permanent income hypothesis under the framework of seasonal cointegration using seasonally unadjusted quarterly data from Austria, Canada and Taiwan. Evidence is found that the consumption change only depends on the innovations of the income and the unemployment rate changes, and that agents are rational in forming their expectations, i.e., the joint hypothesis is supported by the data used. However, with the same data set, a similar test based on non-seasonal cointegration tends to reject the joint hypothesis, since the test ignores completely the possible stochastic seasonalities that may contain important information, as has been pointed out by Wallis (1974), embodied in the data. I . In t r o du c t i o nThe current study re-examines the permanent income hypothesis (PIH), which was developed by Friedman (1957) and has figured prominently in consumption theory over the past forty years, under the additional hypothesis of rational expectations. The rational expectations-permanent income hypothesis (RE-PIH) postulates that agents are forward looking and make consumption plans on the basis of their permanent income rather than their current income. This hypothesis implies that temporary changes in income should have less impact on consumption than changes in permanent income. Hall (1978) showed theoretically that, under rational expectations with fixed real interest rates, consumption changes are unpredictable since the desired consumption evolves as a random walk process.According to Flavin (1985), the optimal consumption in period t, C t , under the PIH is expressed in first differences aswhere D denotes the first difference operator, y p t is the permanent income in period t, y t is current income, and y t À y p t is transitory income. Equation (1) is quite a general form that nests special cases of both the PIH, when b T ¼ 0, and an extreme form of the Keynesian consumption function, when b p ¼ b T . To avoid any potential misspecifications, equation (1) often extends to incorporating extra exogenous variables affecting consumption. Similar to the treatment of income, both the expected and unexpected components of the extra variables are included in equation (1). If the coefficients of the unexpected part of the extra variables are significantly different from zero, then the optimal consumption plan (1) is incorrect, which invalidates the PIH.

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Section: Introductionmentioning

confidence: 92%

A Joint Test of the Rational Expectations‐Permanent Income Hypothesis under Seasonal Cointegration

Huang

2002

Australian Economic Papers

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“…Analysis on aggregate saving rates is even harder to find. Some examples are Arrau andOks (1992), Calderon (1996), Sinha and Sinha (1998), Villagómez (1993Villagómez ( , 1997Villagómez ( , 1998, Garrido (1996), Katz (1992), Amozurrutia, (1989), andZamudio (1997), all of which are dated in the past century, and which focus on quantifying the level of saving in the country.…”

Section: Previous Studies Of Saving At the Micro Level In Mexicomentioning

confidence: 99%

Understanding Domestic Saving in Latin America and the Caribbean: The Case of Mexico

Mendoza,

Karver,

Székely

2015

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This study addresses why Mexico continues to show below-average economic growth rates in spite of displaying systematically higher domestic savings than other countries in the region. Using the wealth of relevant databases available for the country, the paper finds that a possible explanation is that household savings account for a majority of domestic savings, and that the main instrument used for savings is durable goods, which implies that savings are not directly injected into the financial system for fueling productive investment. The construction of a synthetic panel from household survey data shows that household savings in Mexico have a clear age-increasing trend and have been growing across generations during the past 30 years; it is thus probable that rates will increase in years to come. However, if those savings continue to elude the financial system, their influence on economic growth may remain limited.

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“…Algunas de las razones de dichos resultados, son el acceso limitado a créditos por partes de los consumidores, el habito y/o la baja posibilidad de ahorro en economías en vías de desarrollo. (Ruiz-Galindo y Venegas-Martínez, 2007; Mendoza-González, 2020), (Villagómez, 1997;Coppelman, 1997 , 2009;Villagómez y Hernández, 2009;Castillo-Ponce, 2003;González, 2002;Verastegui y Cedillo, 2006). Por otro lado, existe las discusiones sobre los regímenes de los comportamientos macroeconómicos, tasas de intereses, demanda monetaria, desigualdad económica, en términos de análisis econométrico consideran desequilibrios de corto plazo tomando diversas rutas, distancias y tiempos frente al equilibrio definido por los vectores de cointegración (Hansen y Seo, 2002;Seo, 2006;Seo, 2011;Mendoza, 2020;González, 2002).…”

Section: Introductionunclassified

Evolución del Consumo de la Economía Mexicana en el Periodo 1980-2019

Ramírez-Loyola

Valdivia

Gil

2022

HITOS

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OBJETIVO: Estimar la función de consumo de las familias mexicanas en el periodo de 1980–2019, empleando la teoría keynesiana. MATERIAL Y MÉTODO: El estudio se realizó mediante un análisis del comportamiento del consumo con datos de las cuentas nacionales, de la base estadística de INEGI, empleando Mínimos Cuadrados Ordinarios MCO. RESULTADOS: Muestran que el consumo como proporción porcentual del Ingreso Nacional Disponible (Yd) representa más del 70%, y aun cuando el consumo es la variable más estable de la función de demanda agregada es de gran importancia el análisis de su evolución. CONCLUSIONES: La función de consumo keynesiana representa asertivamente el consumo de México, de acuerdo con el modelo de MCO realizado, a un 95% de confiabilidad.

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Private saving, interest rates and liquidity constraints in LDCs: recent evidence

Cited by 14 publications

References 7 publications

A Joint Test of the Rational Expectations‐Permanent Income Hypothesis under Seasonal Cointegration

A Joint Test of the Rational Expectations‐Permanent Income Hypothesis under Seasonal Cointegration

Understanding Domestic Saving in Latin America and the Caribbean: The Case of Mexico

Evolución del Consumo de la Economía Mexicana en el Periodo 1980-2019

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