Real Income Growth and Optimal Credit Use

Authors

  • Jessie X. Fan Assistant Professor, Family and Consumer Studies Department, University of Utah.
  • Y. Regina Chang Post-Doctoral Researcher, Family Resource Management Department, The Ohio State University.
  • Sherman Hanna Ohio State University, Family Resource Management Department, Columbus, OH 43210-1295.

DOI:

https://doi.org/10.1016/1057-0810(93)90005-B

Abstract

Borrowing may be optimal ifreal income is expected to kcrease. rfincome growth is uncertain, optimal credit use is not obvious. A two period model of consumptionfor determining optimal credit use is presented, The impact of real income growth is Malyzed with numerical analysis. The results may be use&l formal cozmselors and educators, as well as for insight into empirical patterns of credit use. The income growth rate expected by the household plays a crucial role in determining opt credit ase for current consumption.

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Published

1993-12-30

How to Cite

Fan, J. X., Chang, Y. R., & Hanna, S. (1993). Real Income Growth and Optimal Credit Use. Financial Services Review, 3(1), 45–58. https://doi.org/10.1016/1057-0810(93)90005-B

Issue

Vol. 3 No. 1 (1993): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1993 JAI Press Inc.

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