Credit Constraints in the Market for Consumer Durables: Evidence from Micro Data on Car Loans

36 Pages Posted: 8 May 2008

See all articles by Orazio Attanasio

Orazio Attanasio

University College London - Department of Economics; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Pinelopi Koujianou Goldberg

affiliation not provided to SSRN

Ekaterini Kyriazidou

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: 2007-04

Abstract

We investigate the significance of borrowing constraints in the market for consumer loans. Using data from the Consumer Expenditure Survey on auto loan contracts we estimate the elasticities of loan demand with respect to interest rate and maturity. We find that, with the exception of high income households, consumers are very responsive to maturity and less responsive to interest rate changes. Both elasticities vary with household income, with the maturity elasticity decreasing and the interest rate elasticity increasing with income. We argue that these results are consistent with the presence of binding credit constraints in the auto loan market.

Suggested Citation

Attanasio, Orazio and Koujianou Goldberg, Pinelopi and Kyriazidou, Ekaterini, Credit Constraints in the Market for Consumer Durables: Evidence from Micro Data on Car Loans (2007-04). International Economic Review, Vol. 49, Issue 2, pp. 401-436, May 2008. Available at SSRN: https://ssrn.com/abstract=1130535 or http://dx.doi.org/10.1111/j.1468-2354.2008.00485.x

Orazio Attanasio (Contact Author)

University College London - Department of Economics ( email )

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Institute for Fiscal Studies (IFS)

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pinelopi Koujianou Goldberg

affiliation not provided to SSRN

Ekaterini Kyriazidou

affiliation not provided to SSRN

No Address Available

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