Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212130
Authors: 
Kilponen, Juha
Year of Publication: 
2009
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 9/2009
Abstract: 
This paper derives and estimates an aggregate Euler consumption equation which allows one to compare the importance of collateral constraints and non-separability of consumption and leisure as alternative sources of excess sensitivity of consumption to current income. Estimation results suggest that during a severe financial distress both non-separability and collateral constraints are needed to capture excess sensitivity of consumption to current economic conditions. During more tranquil times, evidence on collateral effects is more limited and non-separability is sufficient to make the Euler consumption equation agree well with the data.
Subjects: 
housing
financial distress
excess sensitivity of consumption
JEL: 
E21
E32
E44
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-501-2
Document Type: 
Working Paper

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