An analytical solution to the inverse consumption function with liquidity constraints. (English) Zbl 1254.91433
Summary: We analyze the consumption function induced by liquidity constraints under perfect foresight in continuous time, obtaining an analytical expression for the inverse consumption function. Liquidity constraints have dramatic effects on consumption, even long before the constraints bind.
References:
| [1] | Attanasio, O. P., Consumption, (Taylor, J. B.; Woodford, M., Handbook of Macroeconomics, vol. 1B (1999), Elsevier), 741-812 |
| [2] | Carroll, C., Buffer-stock saving and the life cycle/permanent income hypothesis, Quarterly Journal of Economics, CXII, 1, 1-56 (1997) · Zbl 0882.90023 |
| [3] | Carroll, C., Kimball, M.S., 2001. Liquidity constraints and precautionary savings, NBER Working 8496.; Carroll, C., Kimball, M.S., 2001. Liquidity constraints and precautionary savings, NBER Working 8496. |
| [4] | Deaton, A. S., Saving and liquidity constraints, Econometrica, 59, 1221-1248 (1991) |
| [5] | Kamien, M. I.; Schwartz, N. L., Dynamic Optimization: The Calculus of Variations and Optimal Control in Economics and Management (1991), North-Holland: North-Holland New York · Zbl 0709.90001 |
| [6] | Mariger, R. P., A life-cycle consumption model with liquidity constraints: theory and empirical results, Econometrica, 55, 533-557 (1987) |
| [7] | Park, M., 2004. An analytical solution to the perfect foresight consumer model with liquidity constraints, Unpublished, University of Michigan.; Park, M., 2004. An analytical solution to the perfect foresight consumer model with liquidity constraints, Unpublished, University of Michigan. |
| [8] | Seater, J. J., An optimal control solution to the liquidity constraint problem, Economics Letters, 54, 127-134 (1997) · Zbl 0902.90033 |
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.
