This study investigates the role of risk attitudes and financial expectations in households’ borrowing behaviour. The central research question is whether risk aversion and optimistic expectations provide additional information beyond the main economic and sociodemographic characteristics in...

We examine the effects of various borrower-based macroprudential tools in a New Keynesian environment where both real and nominal interest rates are low. Our model features long-term debt, housing transaction costs and a zero-lower bound constraint on policy rates. We find that the long-term...

Leaning against the wind of credit booms is a monetary policy that is tighter than what is consistent with standard inflation targeting. This way the central bank tries to address excessive household debt. While the merits of such policy have been analysed, I argue that there are two dimensions...