Credit card debt puzzles

Arbeitspapier

Most US credit card holders revolve high-interest debt, often combined with substantial (i) asset accumulation by retirement, and (ii) low-rate liquid assets. Hyperbolic discounting can resolve only the former puzzle (Laibson et al., 2003). Bertaut and Haliassos (2002) proposed an 'accountant-shopper' framework for the latter. The current paper builds, solves, and simulates a fully-specified accountant-shopper model, to show that this framework can actually generate both types of co-existence, as well as target credit card utilization rates consistent with Gross and Souleles (2002). The benchmark model is compared to setups without self-control problems, with alternative mechanisms, and with impatient but fully rational shoppers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFS Working Paper ; No. 2005/26

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Consumption; Saving; Wealth ; Portfolio Choice; Investment Decisions
• Subject: Credit Cards ; Debt ; Self Control ; Household Portfolios ; Kreditkarte ; Schulden ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Haliassos, Michael ; Reiter, Michael
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (where): Frankfurt a. M.
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/25462
• URN: urn:nbn:de:hebis:30-23385
• Last update: 10.03.2025, 11:45 AM CET