Credit constraints and GDP growth: Evidence from a natural experiment

Anil Kumar and Che-Yuan Liang

Economics Letters, 2019, vol. 181, issue C, 190-194

Abstract: Before 1998, Texas was the only state that greatly restricted home equity loans and cash-out refinancing for non-housing consumption. Such borrowing was authorized in Texas, for the first time, through a constitutional amendment in 1998. Using state-level panel data and recently developed synthetic control methods based on machine learning we find that the Texas’ constitutional amendments relaxing credit constraints had an insignificant impact on GDP growth. Our findings have important policy implications for the stimulative effect of easier home equity access on GDP growth.

Keywords: Credit constraints and GDP growth; Synthetic control with machine learning (search for similar items in EconPapers)
JEL-codes: C23 E44 E65 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:181:y:2019:i:c:p:190-194

DOI: 10.1016/j.econlet.2019.05.037

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