Publication type
Journal Article
Authors
Publication date
June 1, 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
Volume: 43 (1):100-120
Subject
Notes
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