Search Results

Showing results 1 to 10 of approximately 85.

(refine search)
Author:Athreya, Kartik B. 

Journal Article
Opinion: Unique Challenges in the Housing Market

The Fed's monetary tightening over the past year has had an immediate effect on the housing market. The average interest rate on a 30-year fixed-rate mortgage more than doubled from about 3 percent at the end of 2021 to around 7 percent by the fall of 2022. Higher mortgage rates — so long as inflation is not expected to stay high — raise the real cost of borrowing to buy a new home, so it is no surprise that new home sales declined throughout 2022. But if the Fed didn't act to bring inflation down, we could expect lenders to charge high rates simply to break even in real terms. The ...
Econ Focus , Issue 1Q , Pages 36

Journal Article
Opinion: Inflation and the Road Ahead for Research

While the Fed has never been a stranger to criticism, the criticism has been notable and specific during the past year. The subject: inflation. This is of course fully understandable. Memories remain fresh of last spring and summer, when annual inflation in "personal consumption expenditures" — which the Fed targets to grow at just 2 percent per year — reached 7 percent. Current inflation remains well above target.
Econ Focus , Volume 22 , Issue 4Q , Pages 32

Working Paper
Household Financial Distress and the Burden of 'Aggregate' Shocks

The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability. To do this, we first establish three facts: (i) regions in the U.S. vary significantly in their "FD-intensity," measured either by how much additional credit households therein can access, or in how delinquent they typically are on debts, (ii) shocks that are typically viewed as "aggregate" in nature hit geographic areas quite differently, and (iii) FD is an economic "pre-existing ...
Working Paper , Paper 20-12

Working Paper
Credit and self-employment

Limited personal liability for debts has long been justified as a tool to promote entrepreneurial risk taking by providing insurance to the borrower in the event of low returns. Nonetheless, such limits erode repayment incentives, and so may increase unsecured borrowing costs. Our paper is the first to evaluate the tradeoff between credit costs and insurance against failure. We build a life-cycle model with risky, and repeated, occupational choice in the presence of defaultable debt contracts. We find that limits to liability can encourage self-employment, and alter the timing, size, and ...
Working Paper , Paper 09-05

Working Paper
The supply of college-educated workers: the roles of college premia, college costs, and risk

Despite a large measured college premium, roughly one-third of all high-school graduates currently do not enroll in any form of college. Moreover, while recent increases in the premium have been accompanied by increases in enrollment, college attainment has remained flat. Our paper studies the roles played by college premia, college costs, and risk, ceteris paribus, for college enrollment and attainment in a simple quantitative model of risky college investment. Our results suggest that most U.S. high-school completers are currently inframarginal with respect to the college premium. We find, ...
Working Paper , Paper 13-02

Working Paper
The Persistence of Financial Distress

Using recently available proprietary panel data, we show that while many (35%) US consumers experience financial distress at some point in the life cycle, most of the events of financial 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 ...
Working Papers , Paper 2017-38

Working Paper
Loan guarantees for consumer credit markets

Loan guarantees are arguably the most widely used policy intervention in credit markets, especially for consumers. This may be natural, as they have several features that, a priori, suggest that they might be particularly effective in improving allocations. However, despite this, little is actually known about the size of their effects on prices, allocations, and welfare. ; In this paper, we provide a quantitative assessment of loan guarantees, in the context of unsecured consumption loans. Our work is novel as it studies loan guarantees in a rich dynamic model where credit allocation is ...
Working Paper , Paper 11-06

Journal Article
Understanding Living Wills

The requirement for large financial institutions to file resolution plans, or "living wills," as mandated by the Dodd-Frank Act, may mitigate the commitment problem behind TBTF. Analyzing the equilibrium of the game between banks, regulators, and debtholders, is a first step to evaluate the effect of this new policy instrument. As an alternative to regulators tying their hands so that they are not able to intervene with a bailout in the event of financial distress, living wills are meant to make the outcomes from bankruptcy better for society. This is achieved by evaluating, and guiding, ...
Economic Quarterly , Issue 3Q , Pages 193-223

Journal Article
The Evolving Relationship between COVID-19 and Financial Distress.

During most of the COVID-19 pandemic, regions with high financial distress saw disproportionately more infections and deaths than regions with low financial distress. As of February 2021, cumulative infections appear more evenly distributed. However, total deaths remain higher in financially distressed regions.
Economic Bulletin , Issue February 24, 2021 , Pages 3

Systemic risk and the pursuit of efficiency

In this essay, senior economist Kartik Athreya identifies systemic risk with the presence of linkages between market participants, where problems for one directly create problems for others. He argues that such situations can arise from the use of contractual arrangements, especially debt that requires frequent refinancing and liquidation in the event of an inability to repay. The presence of spillover effects can, in turn, lead to outcomes in the wake of shocks that can be improved via policy intervention. Nonetheless, he cautions against taking this as a license to intervene after the fact, ...
Annual Report


FILTER BY Content Type

FILTER BY Jel Classification

E21 18 items

E44 14 items

G11 13 items

D31 10 items

D58 9 items

G21 9 items

show more (18)

FILTER BY Keywords

Bankruptcy 24 items

Financial Distress 18 items

Consumption 10 items

Delinquency 10 items

credit card debt 9 items

Foreclosure 8 items

show more (121)