Liquidity constraints and the behavior of aggregate consumption over the Brazilian Business Cycle

Resumo

The Brazilian business cycle presents a key feature consisting ofa high volatility of the consumption series. The standard deviation ofthe non-durable consumption seriesreaches 5.26%, almost as high as the volatility ofthe GNP (5.57%) over the period 1970-1998. The failure ofthe standard real business cycle model to capture thisfact could be related to the high credit restriction most consumer faces in the country. The present study aims to present an extended recursive general equilibrium model to better mimic the above empirical evidence, introducing heterogeneous agentsin the model economy characterized by a set of agents who does not behave according to the permanent income hypothesis due to the credit restriction they face everyperiod. The numerical analysis ofthe proposed model economy reproduces the high volatility present in the Brazilian consumption series. However, the correlation between output and investment series is underestimated due to the presence of those agents who cannot smooth out consumption over the business cycle.

Ficha do documento

Tipo

Artigo científico

Ano

2002

Instituição

Universidade de São Paulo. Faculdade de Economia, Administração, Contabilidade e Atuária

Fonte

Estudos Econômicos

Idioma

Inglês

Acesso

Não informado

DOI

10.11606/1980-53573242mbrj

Identificador

oai:revistas.usp.br:article/215511

Licença

https://creativecommons.org/licenses/by-nc/4.0

Palavras-chave

Consumo de bens não-duráveisModelo de ciclos reais de negócioVolatilidadeNon-durable consumptionReal business cycle modelVolatility