BoE paper explores link between mortgage debt and consumption

band-of-england-evening
Bank of England

Spending cuts associated with debt may have reduced aggregate private consumption by as much as 2% after the financial crisis, on the back of concerns over tighter credit conditions and the ability to repay debt, a Bank of England working paper has said.

Philip Bunn and May Rostom discuss the relationship between mortgage debt and consumption through analysis of household-level microdata in Household debt and spending in the United Kingdom.

The 2% drop is suggestive of an "unwinding of faster

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