Consumption Growth Depends upon Credit Growth
(Instrumental Variables Estimation), January 2002–November 2008
Dependent variable: Retail sales growth (year-on-year)1/
|Real Wage Growth2/||One-Month Lagged Real Household Credit Growth||Consumers’ Expectations About Unemployment Prospects in the Next 12 Months3/||R -Bar Square|
**, *, + indicate significance at 1 percent, 5 percent, and 10 percent, respectively. Constants and MA terms not shown.
Instruments used are one through three-, six- and nine-month lagged real wage growth, real credit growth, and retail sales growth.
European Central Bank survey on the percentage of consumers expecting unemployment to rise minus that expecting it to fall. An increase represents deteriorating prospects. Not available for non-EU countries.
For Poland, May 2005 to November 2008, and, for Romania, January 2002 to December 2005, due in both cases to strong structural breaks.