May Rostom, Bank of England

Debt and Consumption in the United Kingdom During the Crisis
mardi 12 septembre 2017 à 11 h 30 13 h 00
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Personne-ressource: 
Francesca Rondina
Courriel: 
Francesca.Rondina@uottawa.ca
Téléphone: 
613-562-5800
Poste: 
6602
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Abstract:  This paper investigates the relationship between mortgage leverage and consumption around the 2008 financial crisis. Using data from the UK’s Family Expenditure Survey and Wealth and Asset Survey, we first show that highly leveraged households made larger cuts to consumption following the financial crisis, and this was argely driven by younger households. Second, using a life-cycle framework, we investigate the channels by which highly leveraged households may have reduced consumption by more than others. Our key finding is that the reduction in credit supply is the most important driver of the empirical co-movement between leverage and consumption growth after 2008.