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Consumption, money and lending: a joint model for the UK household sector

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  • K Alec Chrystal
  • Paul Mizen

Abstract

Previous research has investigated consumers' expenditure and money demand as separable equations. This study estimates them jointly as driven by the same influences. Credit is also included as a potential third variable that might provide a source of additional information about the monetary transmission mechanism. Consumption, money and lending equations are modelled as an interdependent system, and the significance of lending for consumption and money is tested. The results using UK household sector data show that a stable credit equation does exist in parallel with money demand and consumption equations, and that interactions modelled in a conditional vector equilibrium correction system are favoured over independent equations.

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Bibliographic Info

Paper provided by Bank of England in its series Bank of England working papers with number 134.

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Date of creation: May 2001
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Handle: RePEc:boe:boeewp:134

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Citations

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Cited by:
  1. K. Alec Chrystal & Paul Mizen, 2005. "Other financial corporations: Cinderella or ugly sister of empirical monetary economics?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(1), pages 63-80.
  2. Bruggeman, Annick & Donnay, Marie, 2003. "A monthly monetary model with banking intermediation for the euro area," Working Paper Series 0264, European Central Bank.
  3. Simon Hall, 2001. "Financial accelerator effects in UK business cycles," Bank of England working papers 150, Bank of England.
  4. Fernando Nieto, 2007. "The determinants of household credit in Spain," Banco de Espa�a Working Papers 0716, Banco de Espa�a.
  5. Seitz, Franz & von Landesberger, Julian, 2010. "Household money holdings in the euro area: An explorative investigation," Working Paper Series 1238, European Central Bank.

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