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The UK Consumption Boom of the Late 1980s: Aggregate Implications of Microeconomic Evidence

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  • Attanasio, Orazio P
  • Weber, Guglielmo

Abstract

Two competing explanations of the UK consumer boom in the late 1980s are the financial liberalization-imperfect housing market hypothesis of Muellbauer and Murphy and the hypothesis of King. We use 15 years of Family Expenditure Surveys, and cohort analysis, to investigate to what extent these two hypotheses agree with observed changes in consumption patterns. We find that the housing markets explanation accounts for much of the increase by older cohorts, but cannot be reconciled with the marked rise in expenditure levels of younger households. A simple simulation exercise shows instead that the expectations hypothesis can generate increases of expenditure by young consumers of the magnitude observed in our data. Copyright 1994 by Royal Economic Society.

Suggested Citation

  • Attanasio, Orazio P & Weber, Guglielmo, 1994. "The UK Consumption Boom of the Late 1980s: Aggregate Implications of Microeconomic Evidence," Economic Journal, Royal Economic Society, vol. 104(427), pages 1269-1302, November.
    • Handle: RePEc:ecj:econjl:v:104:y:1994:i:427:p:1269-1302
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