Essays on the Stochastic Behavior of Consumption and Output

This dissertation is comprised of three essays. The first essay, on the stochastic behavior of consumption, examines different formulations of the Euler equation, in order to estimate the intertemporal elasticity of substitution in Brazil during the 1980s. Our findings indicate that the intertemporal elasticity of substitution for those consumers who consume their permanent income is statistically significant but less than one, denoting that a rise in interest rates had both a substitution and income effects in Brazil during this period. The percentage of consumers that are liquidity constrained, i.e. constrained to consume their current level of income, is estimated to be around one third of the consumer population. The income effect and the relatively low percentage of current income consumers suggest that indexed assets has played an important role in allowing Brazilian consumers to spread income over time.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2014

Author dc:creator

• Cavalcanti, Carlos B.

Contributors dc:contributor

• Maloney, William F.,

• Economics, General
• Economics, Theory

Identifier

(UMI)AAI9305484

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/72416