This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Journal: Macroeconomics
  4. October 2012
  5. Home Equity Lending and Retail Spending: Evidence from a Natural Experiment in Texas

Home Equity Lending and Retail Spending: Evidence from a Natural Experiment in Texas

  • Chadi S. Abdallah
  • William D. Lastrapes
American Economic Journal: Macroeconomics
vol. 4, no. 4, October 2012
(pp. 94-125)
Download Full Text PDF

Abstract

We estimate how spending in Texas responded to a 1997 constitutional amendment that relaxed severe restrictions on home equity lending. We use this event as a natural experiment to estimate the importance of credit constraints. If households are credit-constrained, such an increase in credit availability will increase their spending. We find that Texas retail sales at the county and state levels increased significantly after the amendment, lending support to the credit-constraint hypothesis. We confirm these findings and refine our interpretation of the estimated aggregate-level responses using household-level data on home equity loans. (JEL D14, E21, G21, G28)

Citation

Abdallah, Chadi S., and William D. Lastrapes. 2012. "Home Equity Lending and Retail Spending: Evidence from a Natural Experiment in Texas." American Economic Journal: Macroeconomics, 4 (4): 94-125. DOI: 10.1257/mac.4.4.94

Additional Materials

JEL Classification

  • D14 Personal Finance
  • E21 Macroeconomics: Consumption; Saving; Wealth
  • G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
  • G28 Financial Institutions and Services: Government Policy and Regulation
There are no comments for this article.
Login to Comment