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Household External Finance and Consumption

  • 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)

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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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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