The Liquid Hand-to-Mouth: Evidence from Personal Finance Management Software

Arna Olafsson, Michaela Pagel

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Abstrakt

We use a very accurate panel of all individual spending, income, balances, and credit limits from a personal finance software to document spending responses to the arrival of both regular and irregular income. These payday responses are robust and homogeneous for all income and spending categories throughout the income distribution. Moreover, we find that few people hold little or no liquidity. We then analyze whether people hold liquidity cushions to cope with future liquidity constraints. However, we find that peoples’ responses are consistent with standard models without illiquid savings, in which neither present nor future liquidity constraints are frequently binding.
OriginalsprogEngelsk
TidsskriftThe Review of Financial Studies
Vol/bind31
Udgave nummer11
Sider (fra-til)4398–4446
Antal sider49
ISSN0893-9454
DOI
StatusUdgivet - nov. 2018

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