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Past research argues that changes in adjustable-rate mortgage (ARM) payments may lead households to cut back on consumption. These outcomes are more likely if ARM borrowers are borrowing constrained, and we show in this paper that ARM borrowers exhibit attitudes towards borrowing and behavior...
Persistent link: https://www.econbiz.de/10013097415
Recently, U.S. households have committed a rising share of disposable personal income to required principal and interest payments on household debt. Studies of the direct link between the household debt service ratio (DSR) and consumption show mixed results - perhaps because debt may instead...
Persistent link: https://www.econbiz.de/10012728542
Liquidity constraints have been proposed as an important explanation for deviations from the rational expectations/permanent income hypothesis. This paper introduces to the liquidity constraint literature the ratio of a household's debt payments to its disposable personal income (DSR). We find...
Persistent link: https://www.econbiz.de/10012715266
Asset-backed securitization transforms assets into securities and in the process separates the credit risk of a pool of assets from the credit risk of the securitization's sponsor, which gives securitization several important advantages over issuing corporate debt. Recent research, however,...
Persistent link: https://www.econbiz.de/10013121181
Credit to consumers and business is critical to the efficient functioning of the U.S. economy, and finance companies are a key source of such credit. Every five years, the Federal Reserve conducts a two-part survey: the Census of Finance Companies (CFC) to identify the universe of such firms and...
Persistent link: https://www.econbiz.de/10013083786
An important question in the household finance literature is whether a change in required debt payments affects borrower behavior. One challenge in this literature has been identifying whether higher default rates observed after an increase in debt payments stem from the inability of borrowers...
Persistent link: https://www.econbiz.de/10013015189
Economist disagree whether the recent increase in credit card debt has been detrimental to U.S. households. However, many rely on a measure of revolving credit published by the Federal Reserve, which captures transactions in which a credit card is used because of its advantages over cash or a...
Persistent link: https://www.econbiz.de/10012737146
Vehicle purchases fell by more than 20 percent during the 2007-09 recession, and auto loan originations fell by a third. We show that vehicle purchases typically account for an outsized share of the contraction in economic activity during a recession, in part because a concurrent tightening in...
Persistent link: https://www.econbiz.de/10013044498
Changes in levels of aggregate household debt in the United States may contain information about the current state of the nation's economy and may affect its future direction. A commonly used measure of household indebtedness is the household debt service ratio (formerly known as the household...
Persistent link: https://www.econbiz.de/10005386584
I argue that the measure of credit card debt used by researchers has grown rapidly in part because it captures debt arising from transactions in which a credit card is used because of its advantages over other payment instruments. Increases in debt stemming from such use may not signal greater...
Persistent link: https://www.econbiz.de/10005086956