2016 Theses Doctoral

Three Essays on Household Finance

Gupta, Arpit

This dissertation centers on the role of adverse shocks to household balance sheets in understanding consumer default behavior. The first chapter studies the role of foreclosure contagion: the role of proximate foreclosures in causally triggering other nearby residential defaults and foreclosures. I find that foreclosure activity causally increases nearby rates of consumer defaults. This paper uses an instrument further examined in the second essay which analyzes the role for adverse selection and moral hazard in mortgage markets; using as a distinction the initial and post-reset interest rates paid on Adjustable-Rate Mortgage contracts. The final essay analyzes the role for cancer diagnosis shocks on household default behavior.