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CREDIT CONSTRAINTS IN THE MARKET FOR CONSUMER DURABLES: EVIDENCE FROM MICRO DATA ON CAR LOANS *
Author(s) -
Attanasio Orazio P.,
Koujianou Goldberg Pinelopi,
Kyriazidou Ekaterini
Publication year - 2008
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2008.00485.x
Subject(s) - loan , interest rate , economics , maturity (psychological) , monetary economics , consumer expenditure survey , bond market , price elasticity of demand , elasticity (physics) , income elasticity of demand , survey data collection , microeconomics , macroeconomics , psychology , developmental psychology , statistics , materials science , mathematics , aggregate expenditure , composite material
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.