Debt portfolios

Arbeitspapier

We provide a model with endogenous portfolios of secured and unsecured household debt. Secured debt is collateralized by owner-occupied housing whereas unsecured debt can be discharged according to bankruptcy regulations. We show that the calibrated model matches important quantitative characteristics of observed wealth and debt portfolios for prime-age consumers in the U.S. We then establish the quantitative result that home equity does not serve as informal collateral for unsecured debt since, as in the data, unsecured debtors hold small amounts of home equity in equilibrium. Thus, observed variations in homestead exemptions, which are an important part of U.S. bankruptcy regulation, have a small effect on the quantity and price of unsecured debt.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5653

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Consumption; Saving; Wealth ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: household debt portfolios ; housing ; collateral ; bankruptcy ; commitment ; income risk ; Private Verschuldung ; Konkurs ; Kreditsicherung ; Dauerhaftes Konsumgut ; Einkommen ; Risiko ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hintermaier, Thomas ; Koeniger, Winfried
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/51626
• URN: urn:nbn:de:101:1-201104213160
• Last update: 10.03.2025, 11:42 AM CET