Can't Pay or Won't Pay?: Unemployment, Negative Equity, and Strategic Default

81 Pages Posted: 25 Nov 2015

See all articles by Kristopher Gerardi

Kristopher Gerardi

Federal Reserve Bank of Atlanta

Kyle Herkenhoff

University of Minnesota - Minneapolis

Lee E. Ohanian

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Paul Willen

Federal Reserve Bank of Boston - Research Department; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: 2015-09-21

Abstract

The authors exploit new data from the Panel Study of Income Dynamics (PSID) to provide a more systematic and detailed analysis of household-level employment, income, and expense shocks to mortgage default decisions than has been possible before. These new data provide very different answers regarding the importance of employment and financial factors in the decision to default on a mortgage than have been found in previous studies that were based on crude proxies for household-level financial variables.

JEL Classification: D12, D14, D19

Suggested Citation

Gerardi, Kristopher S. and Herkenhoff, Kyle and Ohanian, Lee E. and Willen, Paul S., Can't Pay or Won't Pay?: Unemployment, Negative Equity, and Strategic Default (2015-09-21). FRB of Boston Working Paper No. 15-13, Available at SSRN: https://ssrn.com/abstract=2694949

Kristopher S. Gerardi (Contact Author)

Federal Reserve Bank of Atlanta ( email )

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Kyle Herkenhoff

University of Minnesota - Minneapolis ( email )

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Lee E. Ohanian

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Paul S. Willen

Federal Reserve Bank of Boston - Research Department ( email )

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United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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