Excerpt from Consumption and Liquidity Constraints Homeownersthe empirical work of Hayashi and Runkle It is however distinct from other definitions which deserve mention. The first is that an individual is liquidity constrained whenever he cannot borrow at the rate at which he could lend. This presumably makes all borrowers liquidity con strained. The second definition is that someone is liquidity constrained when he can't borrow at any interest rate. This makes only the victims of usury laws liquidity constrained. This latitude in definitions parallels the latitude of the definitions of involuntarily unemployed expounded by Lucas The purest definition of liquidity constraint is probably that an individual is liquidity constrained if his expected marginal rate of substi turion between consumption today and consumption tomorrow is above the cost to society of providing him with a unit of consumption tomorrow in all states of nature. However, such a definition in contrast to the one presented here is not very operational. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.