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These papers report on research carried out by, or under the supervision of, the external members of the Monetary Policy Committee (MPC) and their economic staff.
24 October 2008
External MPC Unit Discussion Paper No. 25
Timothy Besley, Neil Meads and Paolo Surico
This paper uses mortgage data to construct a measure of terms on which households access to external finance, and relates it to consumption at both the aggregate and cohort levels. The Household External Finance (HEF) index is based on the spread paid by risky borrowers in the mortgage market. There is evidence that the terms of access to external finance matter more for the consumption of young cohorts in UK data. Results are robust to a wide variety of specifications.