Rational exuberance at the mall: addiction to carrying a credit card balance |
| |
| Authors: | Kaili Shen |
| |
| Institution: | Department of Economics , University of Victoria , Victoria, B.C., Canada , V8W 2Y2 |
| |
| Abstract: | The Becker-Murphy model of rational addiction is tested with New Zealand credit card debt data. The results clearly favour the rational addiction model over the myopic, backward-looking model. The estimated short-run and long-run price elasticities are ?0.58 and ?2.32 respectively, and the estimated rate of time-preference is 6.7% per quarter. |
| |
| Keywords: | |
|
|
