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The Formation of New Monetary Policies: Decisions of Central Banks on the Great Recession
Open AccessArticle

Household Debt and Consumption Inequality: The Spanish Case

1
University College London, Gower St, London WC1E 6BT, UK
2
Faculty of Economics, Universidade da Coruña, Campus de Elviña, s/n, 15071 A Coruña, Spain
*
Author to whom correspondence should be addressed.
These authors contributed equally to this work.
Economies 2014, 2(3), 147-170; https://doi.org/10.3390/economies2030147
Received: 29 November 2013 / Revised: 4 July 2014 / Accepted: 9 July 2014 / Published: 21 July 2014
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)
The aim of this paper is twofold. On the one hand, we attempt to find out whether Spanish households took part in a process of substituting loans for wages during the period before the beginning of the current economic crisis. On the other hand, we try to identify the consequences of such process in the evolution of income and consumption inequalities. The theoretical framework to deal with the above mentioned issues is provided by a review of the economic literature on the determinants of consumer behaviour, namely, on consumption, saving and debt. The empirical study consists of a descriptive analysis, which is focused on two fields. First, we analyze the evolution of consumer credit (both, in aggregate and by income groups) and the savings rates. Second, we compare the values and temporal evolution of income and consumption inequalities. The period under study ranges from 2000 to 2008. Our analysis provides some empirical evidence that supports the hypothesis that financial conditions led to significant effects on the distribution of consumption. This influence is especially significant in the case of consumption inequalities. These inequalities were lower than income inequalities and were kept “artificially” low and stable during the whole period. View Full-Text
Keywords: financial conditions; household indebtedness; consumer credit; income distribution; consumption inequalities financial conditions; household indebtedness; consumer credit; income distribution; consumption inequalities
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Pardo, G.P.; Sánchez Santos, J.M. Household Debt and Consumption Inequality: The Spanish Case. Economies 2014, 2, 147-170.

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