Debt-financed consumption sprees can be socially costly. Easy access to credit can push economic activity above sustainable levels, eventually requiring cutbacks in spending, lay-offs from over-grown sectors, and write-downs of bad debts. This paper investigates problems of over-borrowing,...

There has been much discussion of what economists could have done differently to help avert the 2007 financial crisis and "Great Recession" that followed. One issue concerns information supplied by economists to the general public about causes of high appreciation in home prices and their likely...