On Testing the Efficacy of Selective Credit Controls: Comment

Hamburger and Zwick (1979) and Maris (1981) presented tests designed to determine the efficacy of selective credit controls on expenditures on consumer durables. Neither of these tests properly address the issue. The Hamburgerwick equation only captures indirect effects of selective credit controls. It does not allow for differential effects of the flow of credit on expenditure in the current period. Maris applies the Sims test for causality on data on expenditures on durables and changes in consumer credit extensions. No selective credit controls were used during the sample period. Even if controls had been used, causality tests should not be interpreted as providing evidence on their impact.