Household Optimism and Overborrowing

Ari Hyytinen, Hanna Putkuri

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)

Abstract

We use Finnish household-level data from 1994 to 2013 to measure how often and what kind of forecast errors households make and how the errors are linked to the households' borrowing behavior and overindebtedness. We find that those households that make the largest optimistic forecast errors have greater debt-to-income ratios. They also are more likely to report that they suffer from excessive debt loads and have problems in coping with their bills. There are no such systematic effects for the households that make pessimistic forecast errors.

Original languageEnglish
Peer-reviewed scientific journalJournal of Money, Credit and Banking
Volume50
Issue number1
Pages (from-to)55-76
Number of pages22
ISSN0022-2879
DOIs
Publication statusPublished - 22.01.2018
MoE publication typeA1 Journal article - refereed

Keywords

  • 511 Economics
  • forecast errors
  • borrowing
  • overindebtedness

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