in The Review of Economic Studies
October 2016; p ublished online March 2016 .
Journal Article. Subjects: Macroeconomics: Consumption, Saving, Production, Employment, and Investment; Money and Interest Rates; Financial Regulation; Law and Economics. 18133 words.
Financial innovations are a common explanation for the rise in credit card debt and bankruptcies. To evaluate this story, we develop a simple model that incorporates two key frictions:...