Descripción
This paper studies the role of time-varying credit limits through the lens of a life cycle incomplete markets model calibrated for the U.S. Changes in credit card limits are explained by observable household characteristics and the estimated unobservable variation is quite large. The quantitative exercise shows that even though young households are more indebted in an economy with stochastic borrowing limits, aggregate consumption is not greatly affected by transitory or persistent shocks of this type. However, in the presence of these shocks, households lose the ability to self-insure against other uninsurable idiosyncratic shocks, e.g., labor income shocks. A disaggregated analysis shows that the loss of self-insurance capacity is mainly explained by the effects that stochastic borrowing limits have on the wealth distribution, the precautionary savings channel households have to face unexpected risks.| Período | 14 nov. 2024 → 16 nov. 2024 |
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| Título del evento | LACEA LAMES Annual Meeting 2024 |
| Tipo de evento | Conferencia |
| Ubicación | Montevideo, UruguayMostrar en mapa |
| Grado de reconocimiento | Internacional |