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The B.E. Journal of Macroeconomics

Editor-in-Chief: Cavalcanti, Tiago / Kambourov, Gueorgui

Ed. by Abraham, Arpad / Carceles-Poveda , Eva / Debortoli, Davide / Schwartzman, Felipe / Wang, Pengfei


IMPACT FACTOR 2017: 0.378
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CiteScore 2017: 0.62

SCImago Journal Rank (SJR) 2017: 0.553
Source Normalized Impact per Paper (SNIP) 2017: 0.605

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1935-1690
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Consumption, Leisure and Borrowing Constraints

Juha Kilponen
Published Online: 2012-05-10 | DOI: https://doi.org/10.1515/1935-1690.2061

We derive and estimate an aggregate Euler consumption equation in which non-separability between consumption and leisure and borrowing constrained households makes current consumption dependent on labour and asset (house) prices. Estimation results suggest that when labour is included in the aggregate consumption equation it proves to be more important than house prices in explaining the wide fluctuations in Finnish consumption data. Moreover, the evidence of excess sensitivity of consumption to income virtually disappears as the consumption Euler equation accounts for predictable changes in labour in the Finnish data.

Keywords: housing; financial distress; excess sensitivity of consumption; collateral constraints; non-separability; intertemporal elasticity of substitution

About the article

Published Online: 2012-05-10


Citation Information: The B.E. Journal of Macroeconomics, Volume 12, Issue 1, ISSN (Online) 1935-1690, DOI: https://doi.org/10.1515/1935-1690.2061.

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