The aim of this thesis study is to enlighten the economic relationship
among consumption, income and liquidity constraints in Turkish Economy. For
this aim, generalized instrumental variables estimation technique (GIVE) is used to
estimate reduced-form consumption equations derived by Hall (1978) and
improved by Campbell and Mankiw (1989). Estimations are realized for two
separate periods of Turkish Economy. For the sub-period of 1987 to 1995, it is
observed that a significant part of households consume their current disposable
income. It is thought that the presence of liquidity constraints forced households to
determine their consumption simply according to their current disposable income.
However, it is observed that the dependence of households to disposable income
decreased substantially, when analyzed for the overall period of 1987 to 2002.
Financial deepening in the economy and the rise of real credit volume contributed
to the decline of the level of liquidity constraints and enabled households to
allocate their income across subsequent periods evenly. Thus, it is concluded that
private consumption behavior is consistent with the Permanent Income / Life-
Cycle Consumption theory for 1987 to 2002 period in Turkish Economy.
| Identifer | oai:union.ndltd.org:METU/oai:etd.lib.metu.edu.tr:http://etd.lib.metu.edu.tr/upload/1001577/index.pdf |
| Date | 01 January 2003 |
| Creators | Ceritoslu, Evren |
| Contributors | Guzel, Alper |
| Publisher | METU |
| Source Sets | Middle East Technical Univ. |
| Language | English |
| Detected Language | English |
| Type | M.S. Thesis |
| Format | text/pdf |
| Rights | To liberate the content for public access |
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