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Household External Finance and Consumption

Author

Listed:
  • 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.

Suggested Citation

  • Besley, Timothy & Meads, Neil & Surico, Paolo, 2008. "Household External Finance and Consumption," Discussion Papers 25, Monetary Policy Committee Unit, Bank of England.
    • Handle: RePEc:mpc:wpaper:0025
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    Cited by:

    1. Giacomo Masier & Ernesto Villanueva, 2011. "Consumption and initial mortgage conditions: evidence from survey data," Working Papers 1101, Banco de España.
    2. 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.
    3. Ellis Connolly, 2009. "Banking Crises and Economic Activity: Observations from Past Crises in Developed Countries," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 206-216, September.
    4. Chuanyong Zhang & Guoliang Feng, 2018. "More wealth, less leisure? Effect of housing wealth on tourism expenditure in China," Tourism Economics, , vol. 24(5), pages 526-540, August.
    5. Anna Florio, 2013. "The Implied Consumer Euler Rate: What Role for Financial Frictions?," CESifo Economic Studies, CESifo Group, vol. 59(4), pages 650-675, December.

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    More about this item

    Keywords

    external finance; terms of access; household consumption; birth cohorts; pseudo panels;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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