Working Paper: CEPR ID: DP18300
Authors: Dimitris Georgarakos; Alexander Popov
Abstract: Using microdata from a U.S. household survey, we document that immigrants who lived through a sovereign default episode are 6\% less likely to hold debt relative to otherwise similar immigrants who reside in the same U.S. state and come from the same foreign country but who did not experience a default. Conditional on holding debt, consumers in the former group borrow less and service lower debt burdens. The negative effect on borrowing behavior of having experienced a sovereign default increases with family size and declines with education. These findings highlight the role of personal experience in shaping households' financial decisions.
Keywords: sovereign default; household borrowing; experiences; immigrants
JEL Codes: D83; G11; G51; H63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Sovereign default (F34) | Borrowing behavior (G51) |
| Sovereign default (F34) | Indebtedness (F34) |
| Family size (J12) | Borrowing behavior (G51) |
| Education level (I21) | Borrowing behavior (G51) |
| Sovereign default (F34) | Debt burden (H63) |
| Sovereign default (F34) | Secured and unsecured debt (F34) |