When the Household Pie Shrinks, Who Gets Their Slice?

Jacob Conway, Natalia Fischl-Lanzoni () and Matthew Plosser
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Natalia Fischl-Lanzoni: https://futuretech.mit.edu/team/natalia-fischl-lanzoni

No 20250306, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: When households face budgetary constraints, they may encounter bills and debts that they cannot pay. Unlike corporate credit, which typically includes cross-default triggers, households can be delinquent on a specific debt without repercussions from their other lenders. Hence, households can choose which creditors are paid. Analyzing these choices helps economists and investors better understand the strategic incentives of households and the risks of certain classes of credit.

Keywords: household finance; household debt; default; debt prioritization; mortgages (search for similar items in EconPapers)
JEL-codes: G2 G5 (search for similar items in EconPapers)
Date: 2025-03-06
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