We develop a novel dynamic model for household debt and household income change studying the interaction between financial fragility and financial literacy. We compare the results to the U.S. data under several parameterizations. Households react pro-cyclically to income shocks and are better able to represent aggregate data when financial literacy is low.
Household Financial Fragility, Debt and Income in a Dynamic Model
Calcagnini, Giorgio;Favaretto, Federico
;Giombini, Germana;Tramontana, Fabio
2024
Abstract
We develop a novel dynamic model for household debt and household income change studying the interaction between financial fragility and financial literacy. We compare the results to the U.S. data under several parameterizations. Households react pro-cyclically to income shocks and are better able to represent aggregate data when financial literacy is low.File in questo prodotto:
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