%0 Report
        %A Hintermaier, Thomas
%A Koeniger, Winfried
        %T Household Debt and Crises of Confidence
        %D 2015
        %8 2015 Oct
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 9409
        %U https://www.iza.org/publications/dp9409
        %X We show that the size of collateralized household debt determines an economy's vulnerability to crises of confidence. The house price feeds back on itself by contributing to a liquidity effect, which operates through the value of housing in a collateral constraint. Over a specific range of debt levels this liquidity feedback effect is strong enough to give rise to multiplicity of house prices. In a dynamic setup, we conceptualize confidence as a realization of rationally entertainable belief-weightings of multiple future prices. This delivers debt-level-dependent bounds on the extent to which confidence may drive house prices and aggregate consumption.
        %K multiple equilibria
%K collateral constraints
%K consumer confidence
%K household debt