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Household External Finance and Consumption

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Author Info

  • Besley, Timothy

    ()
    (Monetary Policy Committee Unit, Bank of England)

  • Meads, Neil

    ()
    (Monetary Policy Committee Unit, Bank of England)

  • Surico, Paolo

    ()
    (Monetary Policy Committee Unit, Bank of England)

Abstract

This paper uses mortgage data to construct a measure of terms on which households access to external finance, and relates it to consumption at both the aggregate and cohort levels. The Household External Finance (HEF) index is based on the spread paid by risky borrowers in the mortgage market. There is evidence that the terms of access to external finance matter more for the consumption of young cohorts in UK data. Results are robust to a wide variety of specifications.

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Bibliographic Info

Paper provided by Monetary Policy Committee Unit, Bank of England in its series Discussion Papers with number 25.

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Length: 46 pages
Date of creation: 24 Oct 2008
Date of revision:
Handle: RePEc:mpc:wpaper:0025

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Keywords: external finance; terms of access; household consumption; birth cohorts; pseudo panels;

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References

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Citations

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Cited by:
  1. František Brazdik & Michal Hlavacek & Aleš Marsal, 2012. "Survey of Research on Financial Sector Modeling within DSGE Models: What Central Banks Can Learn from It," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(3), pages 252-277, July.
  2. Masier, Giacomo & Villanueva, Ernesto, 2011. "Consumption and initial mortgage conditions: evidence from survey data," Working Paper Series 1297, European Central Bank.

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