A simple theory of exploding household debts

Minseong Kim

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, I explore how a household budget constraint allows one to construct a simple theory of exploding household debts. The conclusion reached in this paper is that in case the household started off being indebted, maintaining balanced budget all the time is a very dangerous choice. For analysis, government is assumed to be non-existent.

Keywords: household debt; budget constraint (search for similar items in EconPapers)
JEL-codes: D11 E13 E21 E62 H61 H62 H63 (search for similar items in EconPapers)
Date: 2016-04-16
New Economics Papers: this item is included in nep-mac and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:70849

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