Druedahl, Jeppe; Jørgensen, Casper Nordal - In: Quantitative Economics 9 (2018) 2, pp. 785-823
This paper addresses the credit card debt puzzle using a generalization of the buffer-stock consumption model with long-term revolving debt contracts. Closely resembling actual US credit card law, we assume that card issuers can always deny their cardholders access to new debt, but that they...