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Author:Edelberg, Wendy 

Working Paper
Understanding the effects of a shock to government purchases

This paper investigates the consequences of an exogenous increase in U.S. government purchase. We find the in response to such a shock, employment, output, and nonresidential investment rise, while real wages, residential investment and consumption expenditures fall. The paper argues that a simple variant of neoclassical growth model which distinguishes between nonresidential and residential investment is consistent with this evidence.
Working Paper Series , Paper WP-98-7

Working Paper
Risk-based pricing of interest rates in household loan markets

Focusing on observable default risk's role in loan terms and the subsequent consequences for household behavior, this paper shows that lenders increasingly used risk-based pricing of interest rates in consumer loan markets during the mid-1990s. It tests three resulting predictions. First, the premium paid per unit of risk should have increased over this period. Second, debt levels should react accordingly. Third, fewer high-risk households should be denied credit, further contributing to the interest rate spread between the highest- and lowest-risk borrowers. For those obtaining loans, the ...
Finance and Economics Discussion Series , Paper 2003-62

Working Paper
Racial dispersion in consumer credit interest rates

Most of the literature exploring racial disparities in consumer credit markets focuses on the issue of access to loans. But the disparate terms on which loans are issued are equally revealing. In this paper, I examine disparities in a variety of consumer loan interest rates using a reduced-form framework. I find that interest rates on loans issued before the 1995 show a statistically significant degree of unexplained racial heterogeneity even after controlling for the financial costs of issuing debt. However, racial dispersion in rates falls off for loans originated after 1995. ; The ...
Finance and Economics Discussion Series , Paper 2007-28

Working Paper
Testing for adverse selection and moral hazard in consumer loan markets

This paper explores the significance of unobservable default risk in mortgage and automobile loan markets. I develop and estimate a two-period model that allows for heterogeneous forms of simultaneous adverse selection and moral hazard. Controlling for income levels, loan size and risk aversion, I find robust evidence of adverse selection, with borrowers self-selecting into contracts with varying interest rates and collateral requirements. For example, ex-post higher-risk borrowers pledge less collateral and pay higher interest rates. Moreover, there is strongly suggestive evidence of moral ...
Finance and Economics Discussion Series , Paper 2004-09

Journal Article
The relationship between leverage and household spending behavior: evidence from the 2007-2009 survey of consumer finances

Some recent studies suggest that high levels of household debt and leverage have contributed to the relatively sluggish growth of consumer spending in the past few years (Dynan, 2012; Mian, Rao, and Sufi, 2013). However, this conclusion has not been widely accepted because of the empirical challenges associated with identifying the relationship amid the dramatic and complicated changes in the household economic environment during the Great Recession and subsequent slow recovery. Leverage may indirectly influence spending by increasing borrowing constraints, impeding refinancing, and raising ...
Review , Issue Sep , Pages 425-448

Newsletter
Household debt

Chicago Fed Letter , Issue Nov

Journal Article
Monetary policy shocks and long-term interest rates

Exogenous shocks to monetary policy strongly affect short-term interest rates, but have little or no effect on longer-term interest rates.
Economic Perspectives , Volume 20 , Issue Mar , Pages 2-17

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