Testing the Existence of Household’s Liquidity Constrint in Iran

Document Type : Original Article


1 Assistant Professor, Faculty of Economic Sciences, Shahid Beheshti University

2 Shahid Behehshti University, M.A. in Economics


One of the basic assumptions in the theories of cousumption is about the possibility of liquidization of future income, in order to cover up household expenses over current income, i.e. a world without liquidity constraint. However the experience of real life makes the validity of this constraint assumption dubious. Therefore, consumption theories are improper. This paper tries to examine the validity of liquidity constraint assumption in Iran and estimate the share of household facing it. We found that this constraint exists is Iran and the share of people facing it in about 16%.


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