Explain how limited access to credit and financial markets can constrain the intertemporal choices of low-income households.

Intertemporal budget constraint (IBC): The measure of the rate at which individuals can trade off consumption in one period for consumption in another period. More recently, several different researchers have devised and implemented tests of the intertemporal budget constraint in a variety of different contexts. The consumer's intertemporal budget constraint is c1 + c2. 1 + r. = y1 + y2. 1 + r. Method One:Find MRS and Substitute. Differentiate the Utility function. dU ... in part due to interviewing methods that check the inter-temporal consistency of responses, ... intertemporal budget constraint of households and asked ... Try adjusting the two interest rates (for borrowing and saving). Note that each affects one portion of the budget constraint: the rate for borrowing affects the ... combined with the intertemporal budget constraint, determine the optimal allocation of (c1,t,h1,t,c2,t+1,h2,t+1). 1.1.2 Tax on Capital Mimics Age-Dependent ... Indeed, given the accounting equation (9.6), the consumption plan of the household will satisfy the intertemporal budget constraint (9.20) if and only if it ... The theoretical model of the intertemporal budget constraint suggests that when the rate of return rises, the quantity of saving may rise, fall, or remain the ... ... intertemporal budget constraint. It is argued that unit root or cointegration tests have low power in rejection unit root from near unit root alternatives ... This is called the intertemporal budget constraint. The present value sum of ... How to derive the intertemporal budget constraint. 3. Conditions for ...