Worker Debt, Default and Diversity of Financial Fragility
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Organización Internacional del Trabajo (OIT)
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| Format: | Entrada de enciclopedia |
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International Labour Organization
2011
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| _version_ | 1874525009832050689 |
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| author | Matthieu Charpe Peter Flaschel |
| author_facet | Matthieu Charpe Peter Flaschel Matthieu Charpe Peter Flaschel |
| contents | Worker Debt, Default and Diversity of Financial Fragility Matthieu Charpe Peter Flaschel This paper presents a model addressing the conditions under which financial instability arises in the event of household debt. The model addresses two main cases. First, household debt is affected by functional income distribution. Second, household debt is affected by credit supply and depends on bank performances. The model shows that financial fragility arises through a Fisher effect in the first case and through a debt financed consumption boom in the second case. The model then explores two extensions. First, we raise the question of debt default and its impact on financial instability. Second, we discuss the ability of capital adequacy ratio to limit financial instability. IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute publication.encyclopediaEntry |
| format | Entrada de enciclopedia |
| id | ilo_995333292602676 |
| institution | Organización Internacional del Trabajo (OIT) |
| publishDate | 2011 |
| publisher | International Labour Organization |
| spellingShingle | Worker Debt, Default and Diversity of Financial Fragility Matthieu Charpe Peter Flaschel Worker Debt, Default and Diversity of Financial Fragility Matthieu Charpe Peter Flaschel This paper presents a model addressing the conditions under which financial instability arises in the event of household debt. The model addresses two main cases. First, household debt is affected by functional income distribution. Second, household debt is affected by credit supply and depends on bank performances. The model shows that financial fragility arises through a Fisher effect in the first case and through a debt financed consumption boom in the second case. The model then explores two extensions. First, we raise the question of debt default and its impact on financial instability. Second, we discuss the ability of capital adequacy ratio to limit financial instability. IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute publication.encyclopediaEntry |
| title | Worker Debt, Default and Diversity of Financial Fragility |
| url | https://researchrepository.ilo.org/esploro/outputs/encyclopediaEntry/Worker-Debt-Default-and-Diversity-of/995333292602676 |