Most of our specifications reflect the influence of other kinds of debt by both including indicators for presence of noneducation
installment debt as well as variable for total household debt in 2007.
To see the problem caused by applying section 1276(a)(3) to partial principal payments on distressed debt, recall the facts of Example 3: a secondary purchaser of
installment debt. Holder, paid $51.16 for a debt with an unpaid principal balance of $81.16.
(49) Historically wary of inflation, the administration largely approved of this restrictive policy as a viable way to check the growth of
installment debt. (50)
(1987) also referenced the life cycle hypothesis in a discussion of consumer
installment debt. They contend that families use debt to bridge the gap between income and needs, particularly the need for large consumer durables.
This is consistent with increases in consumer spending on durable goods being financed by consumer
installment debt. This suggests that increases in consumer debt do not signal future recessions, but instead, business cycle expansions give rise to higher consumer debt levels.
Jeffrey Feiner, analyst with Lehman Brothers Inc., said that despite good employment trends, he is concerned that low savings rates, a small drop in consumer confidence and high levels of
installment debt will eventually curtail retail spending.
As shown in Figure 1, while debt service has risen lately, it was not as high as the ratio of consumer
installment debt to income and did not reach at a new peak in 1996.
The specialists in the field of economics will find this chapter quite engaging, as it covers a vast array of economic concepts and issues that include: static utility of income, consumption function, certainty equivalence, risk preference, permanent income function, consumption function with motion, income distribution, real interest rate, durable goods and
installment debt.
Hendricks and others report the highest ratios of
installment debt to income for middle-income families.(13) Kennickell and Shack-Marquez also show that the proportion of families carrying credit cards and other consumer debt is the largest for middle-income families.(14) Consequently, a shift in the distribution of income toward middle-income families might be associated with more consumer borrowing for a given amount of consumption.
In December of 1990, MIDA elected to purchase a prime rate cap against other amortizing
installment debt it used to acquire another company in California.
--Over half of these families (53%) have
installment debt whose typical amount was $13,500.
