Hidden Bibliographic Details
| Other authors / contributors: | Patnaiky, Ila, author.
International Monetary Fund. Research Department, issuing body.
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| ISBN: | 9781484319161
1484319168
9781484325988
1484325982
1484365682
9781484365687
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| Notes: | Title from PDF title page (IMF Web site, viewed July 1, 2013).
"Research Department."
"May 2013."
Includes bibliographical references (pages 31-32).
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| Summary: | "How does access to credit impact consumption volatility? Theory and evidence from advanced economies suggests that greater household access to finance smooths consumption. Evidence from emerging markets, where consumption is usually more volatile than income, indicates that financial reform further increases the volatility of consumption relative to output. We address this puzzle in the framework of an emerging economy model in which households face shocks to trend growth rate, and a fraction of them are credit constrained. Unconstrained households can respond to shocks to trend growth by raising current consumption more than rise in current income. Financial reform increases the share of such households, leading to greater relative consumption volatility. Calibration of the model for pre and post financial reform in India provides support for the model's key predictions"--Abstract
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