Federal Reserve Bank of Kansas City
Research Working Paper
The Persistence of Financial Distress.
Using recently available proprietary panel data, we show that while many (35%) US consumers experience fi nancial distress at some point in the life cycle, most of the events of nancial distress are primarily concentrated in a much smaller proportion of consumers in persistent trouble. Roughly 10% of consumers are distressed for more than a quarter of the life cycle, and less than 10% of borrowers account for half of all distress events. These facts can be largely accounted for in a straightforward extension of a workhorse model of defaultable debt that accommodates a simple form of heterogeneity in time preference but not otherwise.
Cite this item
Kartik B. Athreya & Jose Mustre-del-Rio & Juan M. Sanchez, The Persistence of Financial Distress., Federal Reserve Bank of Kansas City, Research Working Paper RWP 17-15, 27 Nov 2017.
- D60 - Microeconomics - - Welfare Economics - - - General
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
Keywords: Default; Fi nancial distress; Consumer credit; credit card debt
This item with handle RePEc:fip:fedkrw:rwp17-15
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