Household External Finance and Consumption

Timothy Besley (), Neil Meads and Paolo Surico ()

No 6934, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 (search for similar items in EconPapers)
JEL-codes: D10 E21 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2008-08
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