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Credit constraints in the market for consumer durables: Evidence from micro data on car loans

Attanasio, OP; Goldberg, PK; Kyriazidou, E; (2008) Credit constraints in the market for consumer durables: Evidence from micro data on car loans. INT ECON REV , 49 (2) 401 - 436.

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Abstract

We investigate the significance of borrowing constraints in the market for consumer loans. Using data from the Consumer Expenditure Survey on auto loan contracts we estimate the elasticities of loan demand with respect to interest rate and maturity. We find that, with the exception of high income households, consumers are very responsive to maturity and less responsive to interest rate changes. Both elasticities vary with household income, with the maturity elasticity decreasing and the interest rate elasticity increasing with income. We argue that these results are consistent with the presence of binding credit constraints in the auto loan market.

Type: Article
Title: Credit constraints in the market for consumer durables: Evidence from micro data on car loans
Keywords: LIQUIDITY CONSTRAINTS, PANEL DATA, CONSUMPTION, INCOME, SELECTION
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/434920
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