Consumption Smoothing or Consumption Binging? The effects of government-led consumer credit expansion in Brazil / Gabriel Garber, Atif R. Mian, Jacopo Ponticelli, Amir Sufi.

Format:

Book

Author/Creator:

Garber, Gabriel.

Contributor:

National Bureau of Economic Research.

Mian, Atif R.

Ponticelli, Jacopo.

Sufi, Amir.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29386.

NBER working paper series no. w29386

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Brazil initiated a major credit expansion program through government banks in 2011. The program primarily targeted public sector workers with offers of payroll-backed loans. Using individual-level administrative data we find that the program led to a 15 percentage point rise in debt to initial income for public sector workers. We develop a new method for estimating workers' expected income growth, and show that ''consumption smoothing'' cannot explain the rise in consumer borrowing. Instead, the evidence supports ''consumption binging'': less financially sophisticated workers borrowed more at high real interest rates, and experienced both higher consumption volatility and lower average consumption.

Notes:

Print version record

October 2021.