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Working Paper
The Effects of Macroeconomic Shocks: Household Financial Distress Matters
When a macroeconomic shock arrives, variation in household balance-sheet health (captured by the presence of financial distress “FD”), leads to differential access to credit, and hence a distribution of consumption responses. As we document, though, over the past two recessions, households in prior FD also experienced macroeconomic shocks more intensely than others, leading to a distribution of shock severity. Quantifying the importance of each dimension of heterogeneity (FD or shock severity) for consumption requires a structural model. We find that heterogeneity in FD matters more than ...
Working Paper
Foreclosure Kids: Examining the Early Adult Credit Usage of Adolescents Affected by Foreclosure
We investigate the long-term effects of foreclosure-induced relocations on adolescents and their subsequent use of credit. We ask whether individuals who experience a foreclosure-induced move between the ages of 10 and 17 are more likely to exhibit signs of credit scarring later in life. To establish a set of counterfactual outcomes, we implement propensity score matching with exact matching on certain characteristics and regression adjustment of the remaining covariate imbalances. We then compare the credit behavior of individuals who experienced a foreclosure-induced move in adolescence to ...
Working Paper
The Effects of Macroeconomic Shocks: Household Financial Distress Matters
When a macroeconomic shock arrives, variation in household balance-sheet health (captured by the presence of financial distress "FD"), leads to differential access to credit, and hence a distribution of consumption responses. As we document, though, over the past two recessions, households in prior FD also experienced macroeconomic shocks more intensely than others, leading to a distribution of shock severity. Thus, quantifying the importance of both dimensions of heterogeneity (FD or shock-severity) for consumption requires a structural model. We find that heterogeneity in FD matters more ...
Discussion Paper
How Are They Now? A Checkup on Homeowners Who Experienced Foreclosure
The end of the Great Recession marked the beginning of the longest economic expansion in U.S. history. The Great Recession, with its dramatic housing bust, led to a wave of home foreclosures as overleveraged borrowers found themselves unable to meet their payment obligations. In early 2009, the New York Fed’s Research Group launched the Consumer Credit Panel (CCP), a foundational data set of the Center for Microeconomic Data, to monitor the financial health of Americans as the economy recovered. The CCP, which is based on anonymized credit report data from Equifax, gives us an opportunity ...