Lucio Sarno

Real Interest Rates, Liquidity Constraints and Financial Deregulation: Private Consumption Behavior in the U.K

We examine the effect of financial deregulation on consumption expenditure in the United Kingdom. A non-linear model for consumption which allows for liquidity constraints through a time-varying parameter dependent on a proxy for financial deregulation is estimated using non-linear instrumental variables. It is concluded that U.K. financial deregulation has significantly reduced liquidity constraints faced by consumers, allowing a higher percentage of the population to smooth consumption over time. The estimated path of the time-varying parameter, interpreted as the proportion of income going to liquidity-constrained households, is consistent with the process of U.K. financial deregulation.

The Economics of Exchange Rates: Subject index

I am grateful to three anonymous referees for constructive comments on a previous draft. I am also indebted to the large number of people who provided helpful and often detailed comments on earlier versions of the paper, including Andrew Atkeson, Leonardo Bartolini, Tamim Bayoumi, Giuseppe Bertola, Stanley Black, William Branson, Guillermo Calvo, Michael Dooley, Hali Edison, Robert Flood, Jeffrey Frankel, Jacob Frenkel, Kenneth Froot, Peter Garber, Robert Hodrick, Peter Isard, Peter Kenen, Ronald MacDonald, Bennett McCallum, Marcus Miller, Maurice Obstfeld, Lawrence Officer, David Papell, Kenneth Rogoff, Nouriel Roubini, Alan Stockman, Lars Svensson, Myles Wallace, and John Williamson. Responsibility for any remaining errors of omission or interpretation remains with the author. This paper was written largely while the author was on the Staff of the Research Department of the International Monetary Fund, Washington D.C., although the views represented in the paper are solely those of the author and are not necessarily those of the International Monetary Fund or of its member authorities.

The Economics of Exchange Rates: Author index

I am grateful to three anonymous referees for constructive comments on a previous draft. I am also indebted to the large number of people who provided helpful and often detailed comments on earlier versions of the paper, including Andrew Atkeson, Leonardo Bartolini, Tamim Bayoumi, Giuseppe Bertola, Stanley Black, William Branson, Guillermo Calvo, Michael Dooley, Hali Edison, Robert Flood, Jeffrey Frankel, Jacob Frenkel, Kenneth Froot, Peter Garber, Robert Hodrick, Peter Isard, Peter Kenen, Ronald MacDonald, Bennett McCallum, Marcus Miller, Maurice Obstfeld, Lawrence Officer, David Papell, Kenneth Rogoff, Nouriel Roubini, Alan Stockman, Lars Svensson, Myles Wallace, and John Williamson. Responsibility for any remaining errors of omission or interpretation remains with the author. This paper was written largely while the author was on the Staff of the Research Department of the International Monetary Fund, Washington D.C., although the views represented in the paper are solely those of the author and are not necessarily those of the International Monetary Fund or of its member authorities.

The Economics of Exchange Rates: Frontmatter

I am grateful to three anonymous referees for constructive comments on a previous draft. I am also indebted to the large number of people who provided helpful and often detailed comments on earlier versions of the paper, including Andrew Atkeson, Leonardo Bartolini, Tamim Bayoumi, Giuseppe Bertola, Stanley Black, William Branson, Guillermo Calvo, Michael Dooley, Hali Edison, Robert Flood, Jeffrey Frankel, Jacob Frenkel, Kenneth Froot, Peter Garber, Robert Hodrick, Peter Isard, Peter Kenen, Ronald MacDonald, Bennett McCallum, Marcus Miller, Maurice Obstfeld, Lawrence Officer, David Papell, Kenneth Rogoff, Nouriel Roubini, Alan Stockman, Lars Svensson, Myles Wallace, and John Williamson. Responsibility for any remaining errors of omission or interpretation remains with the author. This paper was written largely while the author was on the Staff of the Research Department of the International Monetary Fund, Washington D.C., although the views represented in the paper are solely those of the author and are not necessarily those of the International Monetary Fund or of its member authorities.