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Working Paper
In the Driver's Seat: Pandemic Fiscal Stimulus and Light Vehicles
Dunbar, Jack; Kurz, Christopher J.; Li, Geng; Tito, Maria D. (2024-03-22)
This paper explores the impact of two fiscal programs, the Economic Impact Payments and the Paycheck Protection Program, on vehicle purchases and relates our findings to post-pandemic price pressures. We find that receiving a stimulus check increased the probability of purchasing new vehicles. In addition, the disbursement of funds from the Paycheck Protection Program was associated with a rise in local new car registrations. Our estimates indicate that these two programs account for a boost of 1 3/4 million unitsâ€”or 12 percentâ€”to new car sales in 2020. Furthermore, the induced ...
Finance and Economics Discussion Series , Paper 2024-013

Working Paper
Debtor Fraud in Consumer Debt Renegotiation
Mikhed, Slava; Raina, Sahil; Scholnick, Barry; Zhang, Man (2022-10-26)
We study how forcing financially distressed consumer debtors to repay a larger fraction of debt can lead them to misreport data fraudulently. Using a plausibly exogenous policy change that required debtors to increase repayment to creditors, we document that debtors manipulated data to avoid higher repayment. Consistent with deliberate fraud, data manipulators traveled farther to find more lenient insolvency professionals who, historically, approved more potentially fraudulent filings. Finally, we find that those debtors who misreported income had a lower probability of default on their debt ...
Working Papers , Paper 22-35

Working Paper
Implications of Student Loan COVID-19 Pandemic Relief Measures for Families with Children
Isen, Adam; Goodman, Sarena; Mezza, Alvaro; Hannon, Simona (2023-05-05)
The initial years of the COVID-19 pandemic and the resulting economic fallout likely posed particular financial strain on U.S. households with children, who faced income disruptions from widespread jobs and hours cuts in addition to new childcare and instruction demands. One common expense for many such households is their student loan payment. The Coronavirus Aid, Relief, and Economic Security (CARES) Act included provisions to curb the impacts of these payments, which have been extended several times. These measures were not targeted and thus applied independent of need. This chapter ...
Finance and Economics Discussion Series , Paper 2023-025

Report
Lessons Learned from Mortgage Borrower Policies and Outcomes during the COVID-19 Pandemic
Gerardi, Kristopher S.; Lambie-Hanson, Lauren; Willen, Paul S. (2022-07-07)
This article reviews the aid offered to the roughly 50 million homeowners with mortgages included in a forbearance program, and the Federal Reserve’s actions that pushed down mortgage rates, allowing many mortgage holders to reduce their monthly payments by refinancing. We deem these policies to be quite effective in relieving financial distress and allowing homeowners to stay in their homes, especially in contrast with the policies pursued during the Great Recession. We emphasize that these policies in part worked because of rising housing prices and home equity, before and during the ...
Current Policy Perspectives

Working Paper
Decomposing Gender Differences in Bankcard Credit Limits
Blascak, Nathan; Tranfaglia, Anna (2021-11-18)
In this paper, we examine if there are gender differences in total bankcard limits by utilizing a data set that links mortgage applicant information with individual-level credit bureau data from 2006 - 2016. We document that after controlling for credit score, income, and demographic characteristics, male borrowers on average have higher total bankcard limits than female borrowers. Using a standard Kitagawa-Oaxaca-Blinder decomposition, we find that 87 percent of the gap is explained by differences in the effect of observed characteristics between male and female borrowers, while ...
Finance and Economics Discussion Series , Paper 2021-072

Working Paper
Paying Too Much? Price Dispersion in the U.S. Mortgage Market
Bhutta, Neil; Fuster, Andreas; Hizmo, Aurel (2020-08-21)
We document wide dispersion in the mortgage rates that households pay on identical loans, and show that borrowers' financial sophistication is an important determinant of the rates obtained. We estimate a gap between the 10th and 90th percentile mortgage rate that borrowers with the same characteristics obtain for identical loans, in the same market, on the same day, of 54 basis points|equivalent to about $6,500 in upfront costs (points) for the average loan. Time-invariant lender attributes explain little of this rate dispersion, and considerable dispersion remains even within loan officer. ...
Finance and Economics Discussion Series , Paper 2020-062

Working Paper
Scarcity and Intertemporal Choice
Sharma, Eesha; Tully, Stephanie; Wang, Xiang (2022-09-01)
Scarcity is a ubiquitous experience, and existing evidence largely suggests that people become more myopic when they feel their resources are scarce. Importantly, evidence for this proposition comes primarily from contexts in which scarcity threatens needs that require resources imminently. The current work examines instances in which scarcity threatens needs along a broader time horizon. Archival data from the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute and five pre-registered studies (N = 7,728) show that the time horizon of threatened needs is an important ...
Working Papers , Paper 22-27

Working Paper
Borrowing and Spending in the Money: Debt Substitution and the Cash-out Refinance Channel of Monetary Policy
Anenberg, Elliot; Scharlemann, Tess C.; van Straelen, Eileen (2023-11-21)
We show that the strong negative effect of higher mortgage rates on cash-out refinancing reflects substitution into other borrowing products, not large changes in total new household borrowing. We exploit an exogenous increase in long-term rates to show that, in the cross-section of outstanding mortgage rates, changes in cash-out and alternative borrowing are offsetting. Additionally, we instrument using monetary policy surprises to show that, over the period from 2006-2021, changes in cash-out refinancing are offset by alternative borrowing. Our results suggest that debt substitution ...
Finance and Economics Discussion Series , Paper 2023-073

Working Paper
Scarred Consumption
Malmendier, Ulrike; Shen, Leslie Sheng (2019-10-09)
We show that prior lifetime experiences can "scar" consumers. Consumers who have lived through times of high unemployment exhibit persistent pessimism about their future financial situation and spend significantly less, controlling for the standard life-cycle consumption factors, even though their actual future income is uncorrelated with past experiences. Due to their experience-induced frugality, scarred consumers build up more wealth. We use a stochastic lifecycle model to show that the negative relationship between past experiences and consumption cannot be generated by financial ...
International Finance Discussion Papers , Paper 1259

Discussion Paper
Consumer Credit Card Payment Deferrals During the COVID-19 Pandemic
Wilshusen, Stephanie M. (2022-02-08)
In response to the economic hardships stemming from COVID-19, many U.S. card-issuing banks offered measures to assist their customers who were financially affected by the pandemic. Unlike previous disaster assistance programs that were typically short in duration and localized, the COVID-19 pandemic affected millions of consumers across the country for a protracted period of time and required application of broad-based relief measures. These measures, along with federal and state stimulus and benefit payments, provided some stability to many consumers’ financial circumstances during ...
Consumer Finance Institute discussion papers

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