The determinants of household debt and balance sheets in the United Kingdom
AbstractHousehold indebtedness has grown sharply in the United Kingdom in recent years. This paper proposes a framework for understanding this based on a model in which households are assumed to plan their lifetime spending rationally, allowing for bequests to future generations. The model is set up to be consistent with both aggregate and disaggregated balance sheet positions as revealed in the British Household Panel Survey. The paper goes on to outline the effect on debt and balance sheets of changes in interest rates, house prices, preferences and retirement income.
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Bibliographic InfoPaper provided by Bank of England in its series Bank of England working papers with number 266.
Date of creation: Jul 2005
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This paper has been announced in the following NEP Reports:
- NEP-ACC-2006-09-30 (Accounting & Auditing)
- NEP-ALL-2006-09-30 (All new papers)
- NEP-DGE-2006-09-30 (Dynamic General Equilibrium)
- NEP-EEC-2006-09-30 (European Economics)
- NEP-URE-2006-09-30 (Urban & Real Estate Economics)
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