Research summary. The primary aim of the project has been to utilise micro data sets in the rigorous empirical decisions in the presence of credit market imperfections. The most important policy-related questions concern the impact of potential credit market constraints: were they binding in the UK in the s and s? Did they cease to bind in the early s when various legal restrictions were removed? Did the removal of these restrictions contribute to the consumption boom of the late s? A related issue concerns empirical methodology. Research to date has most often used either a failure of the life-cycle model (usually with excess sensitivity to income) to infer credit market restrictions or, using micro data, has separated households into unconstrained and potentially constrained using prior information. Both of these approaches have problems. An aim of this project was therefore to use and develop ways of identifying the existence and importance of binding constraints using alternative approaches, while still within the confines of a rigorous theoretical model. Partly as a result of the methodology chosen, a subsidiary aim was to examine the links between expenditure on durable as opposed to non- durable goods. In particular, can the utility function be shown to be separate between these two types of goods? Finally, we aimed to compare the experience of the UK with other countries. To this end we collaborated with researchers in the US and Italy to use similar approaches using US and Italian data.