In this paper we analyze a mechanism that is particularly relevant to the workings of the Great Recession: we explain how easier home financing and higher homeownership rates increase unemployment rates. To this purpose we build a model of job search with liquid wealth accumulation and...

We use administrative data for Norway to estimate an incomplete-market life-cycle model of retired singles and couples with a bequest motive, health-dependent utility, and uncertain longevity and health. We allow the parameters of the bequest utility to differ between households with and without...

There is evidence that a household's consumption response to transitory income does not decline, and perhaps increases, with the level of financial assets it holds. That is, middle class households with assets act as if they face liquidity constraints. This paper addresses this puzzling...

The saving ratio of households in Germany has increased in the past few years when the income trend was weak. This could be due to precautionary saving. In this paper, the importance of precautionary saving against income uncertainty is analyzed empirically using micro data from the German...

A welfare analysis of unemployment insurance (UI) is performed in a general equilibrium job search model. Finitely lived, risk-averse workers smooth consumption over time by accumulating assets, choose search effort when unemployed, and suffer disutility from work. Firms hire workers, purchase...

Behavioral economics identifies myriad deviations from classical economic assumptions about consumer decision-making, but lacks evidence on how its diverse phenomena fit together and whether they are amenable to modeling as low-dimensional constructs. We pursue such parsimony on three fronts,...

A number of economists argue that household deleveraging can exert a significant drag on the economic recovery by weighing on consumption. Using a sample of OECD countries, this paper finds evidence of a negative relationship between household saving rates and changes in debt-to-income ratios....