Using matched microdata for the UK, I estimate two distinct channels via which credit supply shocks affect mortgage … debt: one that operates through price conditions in credit markets; and another that operates through non-price credit … conditions and affects the quantity of credit supplied by lenders. I find substantial heterogeneity in the different channels by …

Household debt rose sharply in the United Kingdom in the decade before the financial crisis. This paper uses household … spending by indebted households after 2007 may reflect a combination of tighter credit conditions and increased concerns about … ability to make future debt repayments. The potential for household indebtedness to lead to large adverse impacts on aggregate …

We investigate the effect of house prices on household borrowing using administrative mortgage data from the United … Kingdom and a new empirical approach. The data contain household-level information on house prices and borrowing in a panel of …

It is well known that quantitative credit restrictions, rather than Bagehot-style ‘free lending' constituted the … Bank of England's policy response to the crisis of 1847. We find that credit rationing due to residual imperfect … information in the sense of Stiglitz and Weiss (1981) cannot be a convincing explanation for quantitative credit restrictions …

In this paper, we first develop a theoretical framework with three types of household: outright homeowners, mortgagors … and renters. We then examine empirically how household debt affects the response of labour supply to shocks to income …, mortgage interest rates and house prices for each type of household. In line with our framework, we find that negative income …

Household debt and house prices in the United Kingdom rose substantially between 1987 and 2006. In this paper we use a … calibrated overlapping generations model of the household sector to examine the extent to which changes in demographics, lower …

and credit frictions. We analyse the effect of a mean preserving shock to the variance of aggregate total factor … capital demand and, therefore, it is greatly magnified by the credit friction. Our findings suggest that uncertainty shocks … can generate sizable impact on economic activity only when transmitted through a credit channel …

change in expenditure. In contrast, the income change is sizable and similar across both household groups and countries …. Consistent with the predictions of a simple heterogeneous agents model with credit-constrained households and multi-period fixed …

by roughly the same amount, which is indicative of credit substitution. Borrowers with an impaired credit history … retained earnings. No evidence for credit substitution of non-bank finance companies is found …