Panitza Library

​New Faculty Publication: Prof. Jeffrey Nilsen

April 27, 2021

Panitza Library is pleased to announce a new article from prof. J. Nilsen:

Kim, D., & Nilsen, J. (2021). Testing the presence of borrowing constraints from consumption responses to housing deposit changesJournal of Asian Economics, 74. doi:10.1016/j.asieco.2021.101301

Abstract: The literature on consumption recognizes the challenge of identifying the presence of borrowing constraints at the household level. In this study, we utilize a unique Korean housing contract, a chonsei contract, to characterize the consumption response to housing deposit changes when households are not limited by borrowing constraints. More specifically, we derive a lower bound for consumption changes, the violation of which indicates the presence of binding borrowing constraints. Applying the result to Korean household data, we identify a group of borrowing-constrained households and confirm the association between borrowing constraints and the excess sensitivity of consumption.

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