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

Orazio P. Attanasio, Pinelopi Koujianou Goldberg, Ekaterini Kyriazidou

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)401-436
Number of pages36
JournalInternational Economic Review
Volume49
Issue number2
DOIs
StatePublished - May 2008

ASJC Scopus subject areas

  • Economics and Econometrics

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