Too much of a good thing? Households’ macroeconomic conditions and credit dynamics

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F04274644%3A_____%2F22%3A%230000881" target="_blank" >RIV/04274644:_____/22:#0000881 - isvavai.cz</a>

Nalezeny alternativní kódy

RIV/61989100:27510/22:10249822

Výsledek na webu

<a href="https://doi.org/10.1515/ger-2021-0033" target="_blank" >https://doi.org/10.1515/ger-2021-0033</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1515/ger-2021-0033" target="_blank" >10.1515/ger-2021-0033</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Too much of a good thing? Households’ macroeconomic conditions and credit dynamics

Popis výsledku v původním jazyce

Favorable macroeconomic conditions, accompanied by optimistic consumer confidence, can stimulate and shape households’ expectations in such a way that they gradually extrapolate the view of good times lasting “forever”. As a consequence, households can then be inclined to accept a much higher level of indebtedness – higher than they would be willing to take on if they were to correctly perceive a discontinuation of the positive trend in the future. This paper documents the empirical link between the macroeconomic conditions faced by households, the confidence of households as investors and consumers, and households’ demand for credit on a sample of 21 European countries. The well-known procyclicality of household credit is found to grow stronger when favorable macroeconomic conditions are met with optimistic consumer confidence. While household credit goes hand in hand with the improving economy during an economic upturn, it is found to be sticky on the way down. Estimates show that households tend to extrapolate recent and current macroeconomic trends to the future and over-estimate the persistence of favorable or adverse conditions.

Název v anglickém jazyce

Too much of a good thing? Households’ macroeconomic conditions and credit dynamics

Popis výsledku anglicky

Favorable macroeconomic conditions, accompanied by optimistic consumer confidence, can stimulate and shape households’ expectations in such a way that they gradually extrapolate the view of good times lasting “forever”. As a consequence, households can then be inclined to accept a much higher level of indebtedness – higher than they would be willing to take on if they were to correctly perceive a discontinuation of the positive trend in the future. This paper documents the empirical link between the macroeconomic conditions faced by households, the confidence of households as investors and consumers, and households’ demand for credit on a sample of 21 European countries. The well-known procyclicality of household credit is found to grow stronger when favorable macroeconomic conditions are met with optimistic consumer confidence. While household credit goes hand in hand with the improving economy during an economic upturn, it is found to be sticky on the way down. Estimates show that households tend to extrapolate recent and current macroeconomic trends to the future and over-estimate the persistence of favorable or adverse conditions.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50206 - Finance

Projekt

—

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2022

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

German Economic Review

ISSN

1465-6485

e-ISSN

1468-0475

Svazek periodika

23

Číslo periodika v rámci svazku

4

Stát vydavatele periodika

DE - Spolková republika Německo

Počet stran výsledku

38

Strana od-do

529-566

Kód UT WoS článku

000757225800001

EID výsledku v databázi Scopus

2-s2.0-85126038220