Household borrowing and consumption in Spain

Carmen Martínez-Carrascal () and Ana Del Rio
Additional contact information
Carmen Martínez-Carrascal: Banco de España
Authors registered in the RePEc Author Service: Carmen Martinez Carrascal

No 421, Working Papers from Banco de España

Abstract: This paper aims at analysing the impact of household borrowing on consumption. These variables are modelled jointly in a Vector Error Correction Model (VECM) where labour income, wealth variables and nominal interest rates are also included. The main estimation result is that deviations of borrowing from its long-run trend have a significant impact on consumption: when lending is above (below) its long-run level, future consumption contracts (expands). This evidence is also, found in a simpler model in which consumption is not modelled explicitly. In addition, when consumption departs from its long-run level, it seems to be an indicator of changes in future labour income.

Keywords: household debt; consumption; error correction (search for similar items in EconPapers)
JEL-codes: E20 E21 E51 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2004-12
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/04/Fic/dt0421e.pdf First version, December 2004 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0421

Access Statistics for this paper

More papers in Working Papers from Banco de España Contact information at EDIRC.
Bibliographic data for series maintained by Ángel Rodríguez. Electronic Dissemination of Information Unit. Research Department. Banco de España ().