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Title:Credit card debt puzzles PDF Logo
Authors:Haliassos, Michael
Reiter, Michael
Issue Date:2005
Series/Report no.:CFS Working Paper 2005/26
Abstract:Most US credit card holders revolve high-interest debt, often combined with substantial (i) asset accumulation by retirement, and (ii) low-rate liquid assets. Hyperbolic discounting can resolve only the former puzzle (Laibson et al., 2003). Bertaut and Haliassos (2002) proposed an ‘accountant-shopper’ framework for the latter. The current paper builds, solves, and simulates a fully-specified accountant-shopper model, to show that this framework can actually generate both types of co-existence, as well as target credit card utilization rates consistent with Gross and Souleles (2002). The benchmark model is compared to setups without self-control problems, with alternative mechanisms, and with impatient but fully rational shoppers.
Subjects:Credit Cards
Debt
Self Control
Household Portfolios
JEL:E21
G11
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-23385
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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