Credit card debt puzzles

Michael Haliassos and Michael Reiter

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: 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.

Keywords: Credit cards; debt; self control; household portfolios (search for similar items in EconPapers)
JEL-codes: E21 G11 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-dge, nep-fin, nep-fmk and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://econ-papers.upf.edu/papers/901.pdf Whole Paper (application/pdf)

Related works:
Working Paper: Credit Card Debt Puzzles (2015)
Working Paper: Credit card debt puzzles (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:901

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).