May Rostom, University College London and Bank of England

Debt and Consumption in the United Kingdom During the Crisis
Tuesday, 12 September 2017 - 11:30 am to 1:00 pm
Location
Contact information
Contact person: 
Francesca Rondina
Email: 
Francesca.Rondina@uottawa.ca
Phone: 
613-562-5800
Extension: 
6602
Registration
Registration required: 
No
Cost to attend: 
Free of charge
Event language: 
Intended audience: 

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.