K. ALEC CHRYSTAL PAUL MIZEN A Dynamic Model of Money, Credit, and Consumption: A Joint Model for the UK Household Sector Previous research has investigated consumers’ expenditure and money demand as separable equations. We estimate them jointly as driven by the same influences. Credit is also included as a potential third variable that might provide a source of additional information about the monetary transmission mechanism. Consumption, money, and lending equations are modelled as an interdependent system, and the significance of lending for consumption and money is tested. The results using UK household sector data show that a stable credit equation does exist in parallel with money demand and consumption equations, and that interactions modelled in a conditional vector equilibrium correction system are favoured over independent equations. JEL code: E41 Keywords: money, credit, consumption. Extensive literatures have developed over the past 50 years or so on consumption and the demand for money. 1 Credit on the other hand has been largely neglected, even though it is clearly intimately related to both 1. See Deaton and Muellbauer (1980), Deaton (1992), Muellbauer (1994), and Muellbauer and Lattimore (1995) for consumption, and Lewis and Mizen (2000) for money demand surveys. The paper was written when both authors were employed with the Bank of England, but the views are those of the authors and not necessarily those of the Bank of England. We have benefited from earlier joint work with Charles Nolan and Norbert Janssen, and from the comments of Andrew Brigden, Spencer Dale, Shamik Dhar, David Hendry, John Muellbauer, Simon Price, Ryland Thomas, Paul Tucker, Michael Wickens and seminar participants at the Universities of Kent, Oxford, York, Cardiff Business School, and the Bank of England. K. ALEC CHRYSTAL is Professor of Money and Banking at the Cass Business School, City of London (E-mail: A.Chrystalcity.ac.uk). PAUL MIZEN is Reader in Monetary Eco- nomics with the School of Economics, University of Nottingham (E-mail: paul.mizen nottingham.ac.uk). Received April 9, 2001; and accepted in revised form January 21, 2003. Journal of Money, Credit, and Banking, Vol. 37, No. 1 (February 2005) Copyright 2005 by The Ohio State University