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Journal Article

Debt and financial expectations: an individual- and household-level analysis

Authors

Publication date

2005

Abstract

In this article we show that optimistic financial expectations impact positively on both the quantity of debt and the growth in debt at the individual and household levels. Our theoretical model shows that this association is predicted under a variety of plausible scenarios. In the empirical analysis we explore the determinants of debt and of growth in debt using British data. We find convincing support for our theoretical priors and show that it is optimistic financial expectations per se that are important in influencing debt, rather than the accuracy of individuals' predictions regarding their future financial situation

Published in

Economic Inquiry

Volume

43 (1):100-120

Links

http://serlib0.essex.ac.uk/search/s?SEARCH=economic+inquiry&sortdropdown=-

Notes

Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*

#508212


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