Household External Finance and Consumption
49 Pages Posted: 2 Dec 2008
Date Written: August 2008
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 U.K. data. Results are robust to a wide variety of specifications.
Keywords: birth cohorts, external finance, household consumption, pseudo panels, terms of access
JEL Classification: D10, E21, G21
Suggested Citation: Suggested Citation
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