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https://doi.org/10.1086/654107

has been cited by the following article:

• TITLE: Cyclical Consumption, Real Interest Rate Deviations and Output Gaps in a Large Emerging Economy: Expected and Unexpected Responses under Different Regimes

  AUTHORS: Ricardo Ramalhete Moreira

  KEYWORDS: Cyclical Consumption, Consumption Trend, Real Interest Rate, Output Gap, Risk Aversion, Brazil

  JOURNAL NAME: Modern Economy, Vol.15 No.5, May 11, 2024

  ABSTRACT: This article proposed and tested the hypothesis that both expected and unanticipated responses of cyclical consumption to changes in real interest rate (and income) are marked by non-linearities and asymmetries, depending on the regime concerning the underlying real consumption time trend. The reference model is in line with the micro-founded optimizing behavior of consumers, and different inference methods were employed to test our hypothesis for the case of a large emerging economy, like the Brazilian one, over the monthly period from February 2003 to July 21, thereby covering a post COVID-19 sample. Under different model specifications and alternative methods for extracting latent cycles, the evidence indicated that in a regime of stagnation/decline in real consumption, the latter becomes more sensitive to both real interest rate deviations and output gaps, compared to what is observed under a growth regime.