Working Paper: NBER ID: w7694
Authors: Orazio Attanasio; Pinelopi K. Goldberg; Ekaterini Kyriazidou
Abstract: We investigate the empirical significance of borrowing constraints in the market for consumer loans. We set up a theoretical model of consumer loan demand, which in the presence of credit rationing implies restrictions on the elasticities of loan demand with respect to the interest rate and the maturity of the loan. We estimate these elasticities and test the theoretical implications using micro data from the Consumer Expenditure Survey (1984-1995) on auto loan contracts. The econometric specification that we employ accounts for important features of the data: selection, censoring, and simultaneity. Our results suggest that credit constraints are binding for some groups in the population, in particular for young and low-income households.
Keywords: No keywords provided
JEL Codes: D0; E0; G2; H0; L0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| credit constraints (E51) | demand for consumer loans (D12) |
| binding credit constraints (E51) | ability to obtain loans (G21) |
| ability to obtain loans (G21) | consumption of durable goods (E21) |
| credit constraints (E51) | consumption of durable goods (E21) |
| credit constraints (E51) | elasticity of loan demand (E41) |