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Equities and inequality

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  • Alessandra Bonfiglioli

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.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 947.

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Date of creation: Sep 2005
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Handle: RePEc:upf:upfgen:947

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Income inequality; financial development; capital market frictions; investor protection; instrumental variables; dynamic panel data;

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Cited by:
  1. Muhammad, Shahbaz & Tiwari, Aviral & Reza, Sherafatian-Jahromi, 2012. "Financial Development and Income Inequality: Is there any Financial Kuznets curve in Iran?," MPRA Paper 40899, University Library of Munich, Germany, revised 26 Aug 2012.
  2. Bittencourt, Manoel, 2008. "Inflation and Financial Development: Evidence from Brazil," Working Papers RP2008/14, World Institute for Development Economic Research (UNU-WIDER).
  3. Manoel Bittencourt, 2007. "Financial Development and Inequality: Brazil 1985-1994," Ibero America Institute for Econ. Research (IAI) Discussion Papers 164, Ibero-America Institute for Economic Research.
  4. Abu N. M. Wahid & Muhammad Shahbaz & Pervaz Azim, 2011. "Inflation and Financial Sector Correlation: The Case of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 145-152.
  5. Giuseppe Bertola, 2007. "Finance and Welfare States in Globalising Markets," RBA Annual Conference Volume, in: Christopher Kent & Jeremy Lawson (ed.), The Structure and Resilience of the Financial System Reserve Bank of Australia.

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