Determination of the Percentage of Hand-to-mouth Consumers among Iranian Households: CCAPM Framework and Euler's Equations

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ROSHAN REZA

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Journal: Journal of Economic Research and Policies Year:2019 | Volume:27 | Issue:89 Page(s): 199-231

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Title

Determination of the Percentage of Hand-to-mouth Consumers among Iranian Households: CCAPM Framework and Euler's Equations

Author(s)

ROSHAN REZA | Issue Writer Certificate

Keywords

hand to mouth consumersQ1

permanent incomeQ3

returns of capital assetsQ1

Euler equationsQ1

GMMQ1

Abstract

In this paper, we want to determine what percentage of Iranian households doesn’ t act according to the permanent income Hypothesis (PIH), the so called hand-to-mouth consumers are, that consume 100% of their current income. For this mean, we have used three models. In the first model, we applied Constant Relative Risk Aversion (CRRA) preferences. In the second, preferences includes the habits of consumption, and in the third, it is imported Kerps-Portz preferences into the household utility function. After estimating the Euler equations with GMM, the percentage of hand-to-mouth consumers in each of models were obtained 0. 37, 0. 52 and 0. 45, respectively. So in average, during 1361 to 1395 period, about %45 of Iranian households have consumed all of their current income and they are hand-to-mouth consumers and they don’ t have any inter-period plan for self consumption. On the other, approximately 55% of households, by maintaining and investing in various types of assets, adjust their consumption plan based on their permanent income. Culturalization can be effective in reducing the percentage of hand-to-mouth households and having an inter-period program for consumption to manage and direct the households' capital to the capital market for the purchase of various types of assets.

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APA: Copy

ROSHAN, REZA. (2019). Determination of the Percentage of Hand-to-mouth Consumers among Iranian Households: CCAPM Framework and Euler's Equations. JOURNAL OF ECONOMIC RESEARCH AND POLICIES, 27(89 ), 199-231. SID. https://sid.ir/paper/360635/en

Vancouver: Copy

ROSHAN REZA. Determination of the Percentage of Hand-to-mouth Consumers among Iranian Households: CCAPM Framework and Euler's Equations. JOURNAL OF ECONOMIC RESEARCH AND POLICIES[Internet]. 2019;27(89 ):199-231. Available from: https://sid.ir/paper/360635/en

IEEE: Copy

REZA ROSHAN, “Determination of the Percentage of Hand-to-mouth Consumers among Iranian Households: CCAPM Framework and Euler's Equations,” JOURNAL OF ECONOMIC RESEARCH AND POLICIES, vol. 27, no. 89 , pp. 199–231, 2019, [Online]. Available: https://sid.ir/paper/360635/en

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