Household Debt Overhang and Unemployment

2019 ◽  
Author(s):  
Jason Roderick Donaldson ◽  
Giorgia Piacentino ◽  
Anjan V. Thakor
Keyword(s):  
Household Debt ◽  
Debt Overhang

Understanding the Macro-financial Effects of Household Debt

2020 ◽  
pp. 226-254
Author(s):  
Adrian Alter ◽  
Alan Feng ◽  
Nico Valckx
Keyword(s):  
Exchange Rates ◽  
Financial Development ◽  
Negative Relationship ◽  
Household Consumption ◽  
Banking Crises ◽  
Crash Risk ◽  
Gdp Growth ◽  
Household Debt ◽  
Debt Overhang ◽  
Flexible Exchange Rates

Higher household debt has been associated with lower future GDP growth across a broad set of 80 countries over the period from 1950 to 2016. Several institutional factors, such as flexible exchange rates, capital account openness, and higher financial development and inclusion, appear to mitigate this negative relationship between an increase in household debt and lower future GDP growth. Three mutually reinforcing mechanisms help explain this relationship. First, increases in household debt amplify the probability of future banking crises which significantly disrupt financial intermediation. Second, crash risk may be systematically neglected due to investors’ overoptimistic expectations associated with household debt booms. Third, debt overhang impairs household consumption when negative shocks hit.

Cancer Diagnoses and Household Debt Overhang

2015 ◽  
Author(s):  
Arpit Gupta ◽  
Edward R. Morrison ◽  
Catherine Fedorenko ◽  
Scott D Ramsey
Keyword(s):  
Household Debt ◽  
Debt Overhang

scholarly journals How to Avoid Household Debt Overhang?: An Analytical Framework and Analysis for India

2020 ◽  
Vol 5 (No. 1 Apr 2020) ◽  
pp. 1-12
Author(s):  
Naoyuki Yoshino ◽  
Prachi Gupta
Keyword(s):  
Analytical Model ◽  
Utility Maximization ◽  
Analytical Framework ◽  
Income Growth ◽  
Stability Conditions ◽  
Household Debt ◽  
Debt Overhang ◽  
Model Stability ◽  
Five Factors ◽  
Income Ratio

In this paper we develop an analytical framework using the household utility maximization approach to model stability conditions to avoid household debt overhang. Our theoretical framework suggests that household debt stability is a function of five factors, namely the rate of interest, period of lending, income growth, loan-to-income ratio, and households’ disutility from borrowing. Further, we apply our analytical model to the case of India and estimate household debt stability conditions for Indian households under various scenarios to estimate the ceiling borrowing ratios below which households can avoid the risk of running into a debt overhang problem.

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