6533b82bfe1ef96bd128d921
RESEARCH PRODUCT
Household Optimism and Borrowing
Hanna PutkuriAri Hyytinensubject
OptimismFinancial economicsCarry (investment)media_common.quotation_subjectDebtEconomicsDemographic economicsPessimismjel:G02jel:D03jel:D14forecast errors; ex ante optimism; borrowingmedia_commondescription
A unique Finnish household-level data from 1994 to 2009 allow us to measure how households’ financial expectations are related to the subsequent outcomes. We use the difference between the two to measure forecast errors and household optimism and link the errors to households’ borrowing behaviour. We find that households making greatest optimistic forecast errors carry greater levels of debt and are most likely to suffer from excessive debt loads (overindebtedness). They also are less attentive to forecast errors than their pessimistic counterparts when forming their expectations for a subsequent period.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2012-05-08 | SSRN Electronic Journal |