The Impact of Credit Constraints, Interest Rates and Housing Equity Withdrawal on the Intertemporal Pattern of Consumption--A Diagrammatic Analysis

Kerry D Patterson

Scottish Journal of Political Economy, 1993, vol. 40, issue 4, 391-407

Abstract: The two period intertemporal model of consumption is extended here to provide some insights into the impact of credit constraints, changes in interest rates and income, and housing equity withdrawal on the intertemporal pattern of consumption. In analyzing the effects of such changes, the author finds it important to draw a distinction between households that have positive or negative net wealth and notes the potentially asymmetric effect of negative and positive increments to income. He views housing equity withdrawal as a rational response to imperfect capital markets. Copyright 1993 by Scottish Economic Society.

Date: 1993
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