This paper tests for excess sensitivity of consumption to predicted income growth using a
behavioral model that allows for myopia and/or irrationality. We use a micro-dataset
containing subjective expectations about future income and subjective indicators of the
families' financial condition that make us possible to evaluate the response to income
changes of agents with liquidity constraint problems. We do not find significant evidence of
excess sensitivity of consumption to income, as well as in the case in which we take into …