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The Impact of Credit Constraints, Interest Rates and Housing Equity Withdrawal on the Intertemporal Pattern of Consumption--A Diagrammatic Analysis

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  • Patterson, Kerry D

Abstract

The two period intertemporal model of consumption is extended here to provide some insights into the impact of credit constraints, changes in interest rates and income, and housing equity withdrawal on the intertemporal pattern of consumption. In analyzing the effects of such changes, the author finds it important to draw a distinction between households that have positive or negative net wealth and notes the potentially asymmetric effect of negative and positive increments to income. He views housing equity withdrawal as a rational response to imperfect capital markets. Copyright 1993 by Scottish Economic Society.

Suggested Citation

  • Patterson, Kerry D, 1993. "The Impact of Credit Constraints, Interest Rates and Housing Equity Withdrawal on the Intertemporal Pattern of Consumption--A Diagrammatic Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(4), pages 391-407, November.
  • Handle: RePEc:bla:scotjp:v:40:y:1993:i:4:p:391-407
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    Cited by:

    1. Catherine L. Mann, 1997. "Globalization and Productivity in the United States and Germany," Working Paper Series Working Paper Special (1), Peterson Institute for International Economics.
    2. Ericsson, Neil R & Hendry, David F & Prestwich, Kevin M, 1998. " The Demand for Broad Money in the United Kingdom, 1878-1993," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 289-324, March.
    3. Márquez, Elena & Martínez-Cañete, Ana R. & Pérez-Soba, Inés, 2013. "Wealth shocks, credit conditions and asymmetric consumption response: Empirical evidence for the UK," Economic Modelling, Elsevier, vol. 33(C), pages 357-366.

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