Debt and Financial Expectations: An Individual and Household Level Analysis
نویسندگان
چکیده
We explore the determinants of debt and growth in debt at the individual and household level. The focus is on the influence of expectations of individuals and households regarding their future financial situation. Our theoretical model predicts a positive association between the quantity of debt and optimism. The empirical findings provide convincing support for our theoretical priors in that optimism impacts positively on both the quantity of debt and the growth in debt. Our results suggest that it is optimism per se that is important in influencing debt rather than the accuracy of individuals’ predictions regarding their future financial situation.
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