School of Economics

   Invites you to a

Macroeconomics and Trade seminar presented by

Michael Boutros
(Bank of Canada)

The Macroeconomic Implications of Coholding

Co-author:
(Andrej Mijakovic – European University Institute)

Wednesday 29 November 2023

12:30pm – 1.30pm

Level 6 Seminar Room (650)

A02 Social Sciences Building
Camperdown Campus

The University of Sydney NSW 2006

 Zoom : 81137193668
Passcode : 696144

 We study the role that the joint distribution of liquid assets and credit card debt plays in aggregate. Grouping households across the distribution of liquid wealth, as is typically done, confounds two very different types of households: true hand-to-mouth households with low liquid wealth due to low liquid assets, and households with low liquid wealth due to high debt. This latter type are coholders who revolve credit card debt and simultaneously hold liquid assets. Coholders display a high marginal propensity to repay debt and a low marginal propensity to consume. To quantify the impact of unsecured credit card debt on stimulative fiscal transfers, we add a cash-in-advance constraint to a standard consumption-savings model. The model generates the co-holding of liquid assets and debt observed in the data and matches the empirically observed marginal propensities to consume and repay debt.

For further information contact: Macroeconomics and Trade seminar series coordinator Dr James Graham (james.a.graham@sydney.edu.au)

For all upcoming seminars in School of Economics see Our events and Calendar