Household optimism and overborrowing
Hyytinen, A., & Putkuri, H. (2018). Household optimism and overborrowing. Journal of Money, Credit and Banking, 50(1), 55-76. https://doi.org/10.1111/jmcb.12453
Published inJournal of Money, Credit and Banking
© 2018 The Ohio State University. This is a final draft version of an article whose final and definitive form has been published by The Ohio State University. Published in this repository with the kind permission of the publisher.
We use Finnish household-level data from 1994 to 2013 to measure how often and what kind of forecast errors households make and how the errors are linked to the households' borrowing behavior and overindebtedness. We find that those households that make the largest optimistic forecast errors have greater debt-to-income ratios. They also are more likely to report that they suffer from excessive debt loads and have problems in coping with their bills. There are no such systematic effects for the households that make pessimistic forecast errors.
PublisherOhio State University Press; John Wiley & Sons, Inc.
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