from Liberty Street Economics
– this post authored by Jacob Conway and Matthew Plosser
When faced with financial hardship, borrowers might choose to repay some debts while falling behind on others – potentially going into default. Such choices provide insight into consumers’ spending priorities and can help us better understand the condition of borrowers under financial distress. In this post, we examine how consumers prioritize their default choices. Do consumers under financial stress default on their credit cards first? Or are they more likely to default on their mortgage?