Pausing Student-Loan Payments Boosted the Economy
But the pandemic-era moratorium may also have led some borrowers to take on even more debt.
Pausing Student-Loan Payments Boosted the EconomyGovernment-related uncertainty is a relatively new concept that researchers are in the process of defining. Chicago Booth's Steven J. Davis defines “policy uncertainty” as having three components.
Professors Lubos Pastor and Pietro Veronesi model two components in their theory—political uncertainty and impact uncertainty. Political uncertainty, or uncertainty about future government actions, pools the first two components highlighted by Davis into one. Impact uncertainty is uncertainty about the impact of those future actions, and it is closely related to Davis’s third component.
Imagine that you anticipate potential changes in the banking structure or regulations. “If you don’t know what the government will do in the future, we call that political uncertainty,” explains Veronesi. “Clearly, because we don’t know what’s going to happen, news about it is going to move the stock market.” Then imagine that the new banking rules are put in place. “Even if we know exactly what the new regulations look like, we don’t know what the long-term impact of that policy is going to be.”
But the pandemic-era moratorium may also have led some borrowers to take on even more debt.
Pausing Student-Loan Payments Boosted the EconomyAs much as we’re awash in data, a huge problem for building predictive models is the information we don’t have.
A Better Way for Finance (and Others) to Handle Missing DataForty percent of commute time savings went back into jobs.
An Upside of WFH for EmployersYour Privacy
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