Household borrowing and consumption in Spain

• Autores: Ana del Río, Carmen Martínez Carrascal
• Localización: Documentos de trabajo - Banco de España, ISSN 0213-2710, Nº 21, 2004, págs. 1-38
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Dialnet Métricas: 1 Cita
• Resumen

  • 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