FINANCIAL LIBERALISATION, CONSUMPTION AND WEALTH EFFECTS IN SEVEN OECD COUNTRIES |
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Authors: | Ray Barrell E Philip Davis |
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Institution: | NIESR; NIESR and Brunel University |
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Abstract: | We estimate the impact of financial liberalisation on consumption in seven major industrial countries, and find a marked shift in behaviour, notably a decline in short‐run income elasticities and a rise in short‐run wealth and interest rate elasticities. A corollary is that consumption equations estimated over both pre‐ and post‐liberalisation regimes may be misleading, and either a form of testing as presented here or a shortening of the sample period may be appropriate for accurate forecasting and simulation. |
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