Household External Finance and Consumption

49 Pages Posted: 2 Dec 2008

See all articles by Timothy J. Besley

Timothy J. Besley

London School of Economics & Political Science (LSE) - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Neil Meads

Bank of England

Paolo Surico

London Business School - Department of Economics; Centre for Economic Policy Research (CEPR)

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

Besley, Timothy J. and Meads, Neil and Surico, Paolo, Household External Finance and Consumption (August 2008). CEPR Discussion Paper No. DP6934. Available at SSRN: https://ssrn.com/abstract=1307524

Timothy J. Besley (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Neil Meads

Bank of England ( email )

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Paolo Surico

London Business School - Department of Economics ( email )

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HOME PAGE: http://sites.google.com/site/paolosurico

Centre for Economic Policy Research (CEPR) ( email )

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HOME PAGE: http://sites.google.com/site/paolosurico

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