This paper examines labour supply adjustment – both hours worked and participation decisions. The analysis focuses on the response of each to financial shocks, employing data from the British Household Panel Survey. Results suggest that employees whose financial situation deteriorates relative...

This paper confronts implications of precautionary saving models with microdata on British households. The results provide support for the central proposition that job insecurity depresses household consumption levels. A one standard deviation increase in unemployment risk for the head of...

In this paper the financial policies and balance sheet adjustment of companies are examined. Using a large panel of quoted UK firms, models for dividends, new equity issuance and investment are estimated, relating them to debt adjustment. The results suggest that while dividends are sticky in...

A house purchase typically requires a deposit (or down-payment) and so a significant amount of cash. This paper considers the empirical implications of this borrowing constraint for the housing market. It shows that, at the aggregate level, models of the housing market that incorporate the...

This paper examines company-level persistence in profitability over the period 1975-98. The competitive forces that act to compete away abnormal returns need not act symmetrically and may differ at different points in the distribution of profitability. This suggestion is tested empirically on an...

The payment of dividends is one of the key unresolved puzzles of company financial behaviour. This paper uncovers a more recent dividend puzzle; that of an increasing proportion of quoted UK companies omitting cash dividends. Also motivated by a desire to understand corporate balance sheet...

Credit channel models emphasise the importance of financial variables in macroeconomic responses to unanticipated economic events. In this paper empirical models are developed that relate implicit interest rates paid by firms to measures of their financial health (principally capital gearing)...

The decision to extract home equity is examined using household-level data for the United Kingdom, 1993 to 2003. At its peak during the period, around one in ten homeowners withdrew equity per year. The paper finds that the equity withdrawal decision conforms to predictions from the standard...

Using a switching regression technique we provide unique evidence on three questions concerning the consumption behaviour of UK households. First, what percentage of households display excess sensitivity to income? Second, what affects the likelihood of being in that group? Third, is there a...