We use the 1979 National Longitudinal Survey of Youth to revisit what is termed the credit card debt puzzle: why … consumers simultaneously co-hold high-interest credit card debt and lowinterest assets that could be used to pay down this debt … complete picture of households' balance sheets. Relative to individuals with no credit card debt but positive liquid assets …

demand for savings. Thus the standard PA model is invalid if the agent has access to credit markets. In this paper we … of credit markets, and the equilibrium level of borrowing or saving is indeterminate in the model. If default is allowed … critically depends upon the treatment of default. If default is notpermitted, efficiency is strictly reduced by the introduction …