TY  - BOOK
AU  - Ganong,Peter
AU  - Noel,Pascal
ED  - National Bureau of Economic Research.
TI  - Liquidity vs. Wealth in Household Debt Obligations: Evidence from Housing Policy in the Great Recession 
T2  - NBER working paper series
PY  - 2018///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - August 2018; Hardcopy version available to institutional subscribers
N2  - We use variation in mortgage modifications to disentangle the impact of reducing long-term obligations with no change in short-term payments ("wealth"), and reducing short-term payments with approximately no change in long-term obligations ("liquidity"). Using regression discontinuity and difference-in-differences research designs with administrative data measuring default and consumption, we find that principal reductions that increase housing wealth without affecting liquidity have no effect, while maturity extensions that increase only liquidity have large effects. Our results suggest that liquidity drives borrower default and consumption decisions, and that distressed debt restructurings can be redesigned with substantial gains to borrowers, lenders, and taxpayers
UR  - https://www.nber.org/papers/w24964
UR  - http://dx.doi.org/10.3386/w24964
ER  -