This paper studies the direct impact of households' debt on consumption over the business cycle. We use household …' debt in past periods are not relevant in determining consumption; (ii) households adjust faster their consumption to debt … leverage, consumption, and asset prices. We find that debt levels exert a negative impact on consumption, which is particularly …

idea that borrowing is undertaken mainly for conspicuous consumption, the article's findings show that middle- income … article provides a nuanced take on consumer credit by exploring the interaction between consumption, borrowing, and class … families in Chile borrow to consume 'ordinary' goods. Through the consumption of these goods, the Chilean middle classes seek …

This paper examines whether biased income expectations due to overconfidence lead to higher levels of debt-taking. In a … lab experiment, participants can purchase goods by borrowing against their future income. We exogenously manipulate income … expectations by letting income depend on relative performance in hard and easy quiz tasks. We successfully generate biased income …

. Overconfident participants scale back their consumption after income feedback. However, they remain in higher debt at the end of the …This paper examines whether biased income expectations due to overconfidence lead to higher levels of debt-taking. We … households (GSOEP-IS). This motivates a laboratory experiment to study causality behind these effects. In two experiments …