The Spending and Debt Response to Minimum Wage Hikes

Following a minimum wage hike, spending increases more than income, and thus debt rises, in households with minimum wage workers. The size, as well as the timing, persistence, composition, and distribution of the spending response is inconsistent with the basic certainty equivalent life cycle model. However, the response is consistent with a model where households can borrow against part of the value of their durable goods

Valuation Effects and External Adjustment: a Review

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